Categories: General Market Commentary
Topics: General Market Commentary

SAMPLE ISSUE: Nick Hodge's Family Office Advantage

 

Editor's Note: Below is a free sample issue of Nick Hodge's Family Office Advantage. My previous weekly letter, Nick Hodge's Early Advantage no longer exists as it belonged to Outsider Club, with which I'm no longer affiliated. You need to contact Outsider Club to cancel or refund Early Advantage. If you'd like to subscribe to my new weekly service, click here. 

--Nick

In this issue:

  • Could Be A Cold Winter
  • To Buy: Chakana Copper, Revival Gold, Ethos Gold
  • To Sell: Millrock Resources
  • To Hold: Critical Elements, ImmunoPrecise 
  • Quickfire: Hydro66, LexaGene

The dollar shied away from the 94 handle we’ve been looking at the past few weeks. 

That, coupled with German bond yields ticking lower, has sent gold back over US$1,900. For now. 
 
The “for now” is because the dollar is making another run at 94 as I type. Gold going higher with the dollar would be something to give thanks for next month. We’ll see if it plays out. 
 
Elsewhere, stocks failed to break out to new highs after a quick rise after the September skid. Little bit of sagging posture on that lower right shoulder there. 

Jobs numbers remain depressionary with another 850k+ jobless claims this week. The Street is once again going to have to pretend that the earnings about to come out are “beating expectations.” (Not for the gold producers though. Their free cash flows are growing… and so are their dividends. I cover them in my monthly letter, Foundational Profits. Soon, some of that cash will be buying the companies we cover in this letter.)
 
Oh, and there’s a second wave of the virus taking shape. 
 
Could be a cold winter. That’s good for duck season, which starts here in Washington this weekend. 
 
The glow of gold gains should help keep you warm. 
 
To Buy
 
We are waiting on drill results from Chakana Copper (TSX-V: PERU)(OTC: CHKKF). They should start coming out over the next week and I expect the results to be good given the known high-grade nature of the mineralization in the breccia pipes. Remember, there are several dozen known breccia pipes and we’re in the early stages of testing just a few of them. Channel results out last week from pipes #1 and #6 included both high-grade silver and gold. We’ll get to see 15,000 meters drilled as part of this campaign. We are buying shares under C$0.60 — a level shares pulled back to over the past week, offering a purchase opportunity before news is out. 
 
Revival Gold (TSX-V: RVG)(OTC: RVLGF) is out with the first drill results from its current 10,000 meter program at  the Beartrack-Arnett gold project in Idaho. Seven holes out today came from the Haidee target at Arnett, where a 200,000 ounce satellite gold resource already exists. All seven holes hit heap-leachable mineralization. A total of 30 holes were drilled there with two rigs, and the rest are being assayed now. You’ll recall that Revival’s resource is currently at three million ounces and it has significant infrastructure onsite because Beartrack was a past producer. A third rig has drilled one hole over at Beartrack, and confirmed the continuation of the Panther Creek Shear Zone, which hosts the bulk of the mineralization at Beartrack. The two rigs at Haidee will now move to Beartrack and test two other targets: 1. Rabbit, which is three kilometers south of the current resource. 2. Extensions of mineralization between the old pits. This thing is going to five million ounces and remains undervalued relative to comps, trading at just US$15 per ounce of resource. We’re buying it under C$1.25 and it has consolidated at its last financing price of C$1.10, giving ample opportunity to buy.
 
I’m not sure how much longer Ethos Gold (TSX-V: ECC)(OTC: ETHOF) is going to remain below its buy under price of C$0.25. It’s been dancing right around it for a few weeks now. The company has added another project to its portfolio, bringing the total to seven exploration projects in Canada and the USA. The new one is called Campbell Lake, and is in Ontario. Ethos only does large projects and this is no different at 34.88 square kilometers. A 10 kilometer prospective corridor was identified by the government in the 1970s, but no prospecting or drilling was ever submitted. Separate from that corridor, a small drill campaign in 1949 yielded 8.57 grams per tonne gold over 25.4 centimetres. No modern exploration work has been reported in over 60 years. Ethos will fly a magnetic survey and get satellite imagery now, ahead of prospecting and sampling early next year. At its Fuchsite Lake property, where Cross River Ventures is earning into 60%, a magnetic survey successfully showed large, large, structurally controlled target corridors coincident with significant gold and base metal occurrences. Those targets will be ground-truthed in the spring. Ethos continues to be a high quality exploration play offering multiple shots on goal with a good chunk of its C$20 million market cap backed by cash. 
 
To Sell
 
I am selling Millrock Resources (TSX-V: MRO)(OTC: MLRKF) at C$0.145. That’s a ~20% gain considering we got in at or below C$0.12. But it’s not the result I wanted. The first few holes at 64 North did not hit. All signs pointed to as close to a slam dunk as you get in this business, and the lack of mineralization leaves big questions. Those questions may not be answered until the spring. I hope to heaven they hit, and have warrants if they do (that’s a major benefit of private placements, which I’ll be covering in Nick Hodge’s Family Office). Until then, Millrock is a sell over C$0.145. 
 
To Hold
 
Critical Elements Lithium (TSX-V: CRE)(OTC: CRECF) is cooling off after a run to C$0.68, briefly putting us up some 133% from our C$0.29 entry price. The company put out an update on its Rose spodumene lithium project in Quebec, for which we’re awaiting positive permitting. 
 
Separate from its therapeutic initiatives for COVID-19, ImmunoPrecise Antibodies (TSX-V IPA)(OTC: IPATF) has delivered lead candidate antibodies for an at-home, cell-phone-based COVID-19 antibody diagnostic test. ImmunoPrecise has multiple irons in the COVID fire. A prototype has now been made using the company’s B cell Select program, which modified antibodies from rabbits to better suit the testing application. It’s also in preclinical trials with its vaccine. All this, and the company is highly successful without any COVID-related products. We’re up 213% and holding. 
 
Quickfire
 
Hydro66 (CSE: SIX)(OTC: HYHDF) is still a buy under C$0.40. It is getting new orders and demand is expected to continue rising for its green cloud platform. Shares still trade with the sentiment of cryptocurrencies, which you can use to your advantage if you’re buying. Even without crypto though, this business should be fetching higher multiples. 
 
LexaGene Holdings (TSX-V: LXG)(OTC: LXXGF) was dealing with supply chain delays for parts for its MiQLab. Those are now resolved and the company is testing and optimizing it ahead of sales, and has given early access to key leaders in the markets it hopes to sell its pathogen detection system. There is also a delay in getting the device approved by the FDA for COVID-19 testing, with the study now expected to start in December. LexaGene is cashed up with C$14.9 million in the bank. The share pullback related to the dely presents an opportunity, in that, like ImmunoPrecise, COVID-19 testing was never LexaGene’s goal. It’s the vet and food markets where it can make serious sales. It’s a buy under C$1.00.
 
Here’s what I’m reading: 

Call it like you see it, 

Nick Hodge
Editor, Hodge Family Office