Markets, Talarus now Tourmaline, GSP, AZT, RECO

Struthers Report V29 # 11.3

Welcome and Thank you to the new subscribers who joined my substack. Please share with you investor friends. This will remain free for sometime. For some more info, my newsletter is version V29 so in production for 29 years. The number #11.3 represents 11 new investment picks this year and .3 represents the 3rd newsletter since last new pick.

Alphabet (GOOG) plunged nearly 10% for its worst day since the start of the COVID pandemic in March 2020. And it dropped further this Thursday. The S&P 500 closed well below 4200 to new lows in this correction of 4187 down -61 when I wrote this and closed at 4137 on Thursday. This likely signals lower levels in the near term (down -28 Thursday as of this writing). However, the market has saw a pretty solid sell off so a counter trend rally could occur anytime. The 10-year Treasury yield moving back to the 5% level didn't help things yesterday.

The auto strike may be nearing its end, as Ford Motor and the UAW union reached a tentative agreement to end a six-week-long walkout. The deal includes a 25% general wage hike over four years, and may become the template to resolve negotiations with other Detroit automakers. This is a significant wage increase and is going to add significantly to cost of new autos and re-enforces my view that inflation is entrenched and here for a long time.

Some sighed relief when the Bank of Canada kept its benchmark interest rate unchanged Wednesday at 5 per cent -- up from just 0.25 per cent in March, 2022, when the bank began a series of rapid rate hikes. Over that same period, the typical price of a home across the country has fallen 13 per cent, a modest decline considering the sharp increase in borrowing costs. BOC senior deputy governor Carolyn Rogers said at a news conference Wednesday, where she was discussing the bank's decision not to hike its rate further: "Normally, house prices move pretty lockstep with interest-rate increases. As interest rates come down, house prices go up a bit. And they'll come off as interest rates come back up." She said, "We're not seeing the decline in house prices that we would expect," adding that there is a "structural lack of supply" of housing in Canada, and that until it is fixed, "interest rates on their own are not going to help us get back to a housing affordability situation or solution."

I pointed out yesterday that household interest payments have increased over 50% in the past year. This makes the housing market and economy a ticking time bomb. How much longer can consumers keep piling up the debt?

Talarus, now Tourmaline - - - - NASDAQ: TRML - - - - Recent Price - $12.36

Entry Price - $6.90 ( $22 -$15.10 adjusted for rollback and cash dividend) Opinion – hold

After the merger, Tourmaline holds 78.1% of the new company, so the stock discounting over -50% is too much, $28 down to $12. Since the merger the stock has been moving up from the $10 level on higher volume. They completed a $75 million financing with the merger so Tourmaline is well cashed up at $218 million. I think we can get a better price for the stock, as the rally from lows continues and perhaps an added boost if the general markets have a rally too. I am looking to get $15 or better.

The junior explorers of all sorts are really beaten up, but I believe we are at a bottom. And remember, these stocks will have the largest percentage gain when a new bull move gets underway. It is well worth collecting a handful of the good ones.

GSP Resource - - - TSXV:GSPR - - - - OTC:GSRCF - - - - Recent Price - $0.115

Entry Price $0.25 - - - - - - - Opinion – buy, average down to $0.17

GSP announced that their Fall 2023 drilling program has commenced at the Alwin Mine Project, a historic producer in B.C. The program of 5 to 6 diamond drill holes is designed to target potential extensions of known high grade copper zones at the Alwin Property located in the Highland Valley Copper Camp of British Columbia. The Alwin Property is adjacent with the western boundary of Teck Corporation’s Highland Valley Mine, the largest open-pit porphyry copper-molybdenum mine in western Canada.

Crews mobilized last week and completed a detailed ground magnetic survey to define mineralization host structures which further refined the targets. Alteration and mineralization of the Highland Valley hydrothermal system extends westward from the Highland Valley mine onto the Alwin property. The stock had a good rally on exploration news in late August. It could have a very strong move on some good drill results.

Aztec Minerals - - - - TSXV:AZT - - - - - Recent Price - $0.17

Entry Price - $0.40 - - - - - - Opinion – buy, average down to $0.24

On Oct 17^th AZT announced they selected a drilling contractor to conduct the upcoming reverse circulation (RC) drilling program at its 100% -owned Cervantes porphyry gold-copper project in Sonora, Mexico. Drilling is expected to commence over the coming weeks and crews have mobilized to the project to prepare for the upcoming program. The drill program is designed based on the results of the company's 2022 drilling campaigns and recently completed surface exploration program, as described in the June 22, 2023 news release.

The planned drill targets have utilized information gathered during the surface road cut sampling and detailed 1:200 scale geologic mapping program conducted in the first half of 2023. The primary objectives of the upcoming drilling programs are to continue to define the open pit, heap leach gold potential of the porphyry oxide cap at California, test the down dip extensions of the silicic-phyllic alteration in the Qfp intrusive for deeper copper-gold porphyry sulfide mineralization underlying the oxide cap, and test for extensions of the California North target.

The stock is beaten down to levels, not seen since 2020. I believe the bottom is in and we should average down to about $0.24. Putting in an equal $$ amount at this price as we did at $0.40 would average us down to about $0.24. It is worth noting that the stock bounced up from $0.15 on high volume.

ReconAfrica - - - - TSXV: RECO - - - OTCQX: RECAF - - - Recent Price - $1.05

Entry Price - $0.56 - - - - - - - - Opinion - buy

Thursday RECO announced that it has entered into a definitive agreement for the sale of its Mexico operations to Chame Energy Corporation, a private Mexican Company. The sale price is $7,500, but more important it frees up restricted cash on RECO's balance sheet, which was $20.4 million on their last financial statements

Brian Reinsborough, President and CEO of the Company stated "We are very pleased with this transaction. It provides the Company with access to working capital while allowing us to exit Mexico and remove the legacy liabilities from our balance sheet in excess of US$100 million. This transaction streamlines our portfolio and enables the Company to focus its resources on progressing our joint venture partnership efforts and preparing to execute our multi-well, high impact exploration program in Namibia which is expected to commence in Q1 of 2024."

For the benefit of new subscribers to my substack, I pick real prices that you could have bought the stock at when I suggest to buy. I see where it trades after my newsletter goes out to pick the entry price. We got lucky with my two gold picks last Friday as gold stocks corrected some the next few days. I picked the average of the closing price Friday and Monday for our entry price.

For Newmont Mining NY:NEM that is Entry Price of $38.60

For B2Gold TSX:BTO that is Entry Price of $4.56

All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author's control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment adviser to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial adviser & is not acting as such in this publication.