Markets Begin September Crumble, Amex Exploration, AMX , Bitcoin
Mid Day Market Report
Welcome to September, it has come right on cue. My last update on the S&P 500, I commented on the double top and marked the support levels I was watching. Today, the market fell through the first support level and we are now headed down to 5,200.
I am feeling pretty confident about my July 12th call of a market top and September 3rd call that the market made a double top. I am expecting a more significant correction than the August and if we break below the August lows, the odds of a bear market go up. As I pointed out in my last substack article 148% of the US jobs are created out of thin air with the birth/death rate model.
The U.S. is headed into a recession or may already be in one. Canada certainly is.
We are already up almost 100% on our Broadcom Puts, in just 2 days, but we have a lot of time and I believe this market is going lower. A buy opportunity in one of our juniors below.
Amex Exploration, TSXV:AMX OTC: AMXEF - - - Recent Price – C$1.16
Entry Price - $1.60 - - - - - Opinion – strong buy
The stock plunged yesterday on news of a completed Mineral Resource Estimate ("MRE") on the company's flagship Perron Project in the Abitibi region of Quebec. The majority of ounces come from the Company's High-Grade Zone ("HGZ"), with important contributions from the Denise Zone ("Denise"), the Gratien Zone ("Gratien"), the Grey Cat Zone ("Grey Cat") and the Team Zone ("Team"). The drillhole database for the resource was closed on June 30, 2024, meaning recent drilling has not been included in this resource iteration at Perron.
Open pit and underground stope constrained 594,100 of measured and indicated ounces at 4.28 g/t Au and 1,049,650 of inferred ounces at 3.80 g/t Au.
Junior Exploration stocks almost always sell off on these resource announcements because the market is always expecting more, especially the last couple years in this weaker junior market. I think the market focused too much on the quantity of ounces instead of the quality. I admit that I expected more than 594,100 M&I ounces. However there is a lot of inferred that I have confidence will be upgraded to M&I.
The high grade is exceptional, especially in the High-Grade Zone (HGZ) that no doubt would be the starting point of the mine. The HGZ alone hosts 336,170 of measured and indicated ounces at 12.05 g/t Au and 415,470 of inferred ounces at 10.49 g/t Au.
This HGZ will probably end up over 1 million ounces on its own and with these grades it will be a big cash cow. Also important is the recovery tests in this zone came in at 99%, again exceptional.
In the press release, the company expressed their delight with HGZ. Of important significance within the HGZ is with improved confidence, comes increased grade. With regard to the HGZ under Table 2, as drill spacing is tightened to upgrade resources from inferred to indicated to measured, the grade improves. This is rare in the gold industry and speaks to exceptional continuity of the zone.
Again like I say it is the quality of this discovery. And this is in a well developed mining area with excellent infrastructure.
Remember early this year. Eldorado Gold Corp. agreed to make a strategic investment in the company through the purchase of 11,344,130 common shares of the company issued pursuant to the offering, for a purchase price of $15-million. Upon closing, the strategic investment represents approximately a 9.9-per-cent ownership interest in the company.
Eldorado would have gone over much of the drill data then and done their own assessment and resource estimate.
In a nut shell I think the market focused on the quantity of ounces but missed the quality along with high recoveries and location, location, location. To me this is a buying opportunity.
On the chart, the stock has hit strong support around $1.00 and the only time it has been this cheap was at the bottom of the junior bear market around late 2023 and back in the 2020 pandemic melt down when the company had far less drilling done and the discovery was in early stages. I expect some resistance around $1.40 and once through that, it will fill the gap back to $1.90.
Bitcoin has dropped to around 54,000 testing recent lows. I am tempted to buy here, but it is Friday and with ETFs, Monday is a long ways off. And I would be more confident to buy if we had a washout day. It is September and Bitcoin will probably go down with the market. I will have a close look early next week.
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