Stagflation, Copper, Fitzroy FTZ, BTO Gold

Stagflation

Friday's correction should be no surprise to any of us as in my Thursday update, I commented I was expecting the markets to next make new lows. Friday's sell off was steep, but expect more weakness and new lows that could come as early as this week in front of us.

I heard the word 'stagflation' in quite a few market commentaries the last few days. As I have been highlighting, there is quite a bit of data pointing to a weak economy and the Atlanta Fed GDPNow is still forecasting -2.8% growth for Q1 2025.

Then on Thursday, the core personal consumption expenditures price index, a key Fed inflation measure, showed a 0.4% increase in February, putting the 12-month inflation rate at 2.8%, both higher than expected.

So we hear the word 'stagflation' more, something I have been talking about for two years and also commenting that we are headed into a period like that of the 1970s/80s. That is where the word 'stagflation' came from and the problem today, there is not many old codgers like myself that know how to recognize it or how it effects markets. It means slow growth but still significant inflation. We had better growth a couple years ago but inflation was even higher, so just like stagflation as the inflation is higher than the growth. The other big factor in the last few years in North America, was the very high illegal immigration and legitimate migration that was all brought in and supported by excessive government programs that inflated the growth and GDP numbers.

Looking at GDP per capita paints a bleak story, especially in Canada. You can see on this world map, that Canada had one of the worst GDP per capita in the world, only ahead of about 4 countries. This data is 2023, and I know it did not get any better in 2024 for Canada. What made it worse in Canada is the immigration was a much higher percentage of the countries small population compared to the U.S. The stronger and bigger U.S. economy absorbed it better.

This weeks major data and events will be what Trump tariffs actually get implemented. The reciprocal is pretty basic. For example if a country has 15% tariff on U.S. wine, Trump will put a 15% tariff on their wine. What we don't know is how many countries and on what might drop their tariffs on the U.S. instead. It will be an eventful week, ending with the job numbers Friday. Those numbers don't include government layoffs but what I heard from Elon Musk in the last few days is that the vast majority of government cuts took packages, so they will not have any impact on the economy in the short run.

My last update on copper, mid March was that I was expecting a test of all time highs around $5.10. Not only did prices test this level but quickly broke through and made new highs last week.

Fitzroy makes exceptional drill discovery of 200 metres of 0.83% Cu equivilant at their Caballos Copper Project. Included a higher grade intercept of 2.31% CuEq over 42 metres.

Fitzroy Minerals - - TSXV: FTZ, OTCQB: FTZFF - - Recent Price - $0.32

Entry Price - $0.15 - - - - - - - - Opinion – strong buy

Fitzroy announce the results from the first ever drill hole at the Caballos Copper Project in Chile, with significant intercepts of copper-molybdenum-gold-rhenium mineralization.

First hole CAB-DDH001 intersected 200 m grading 0.46% Cu, 591 ppm Mo, 0.07 g/t Au, (0.83% CuEq), from a depth of 66 metres:

• including 98 m @ 0.78% Cu, 1071 ppm Mo, 0. 12 g/t Au, (1.45% CuEq 2 ), from 151 m

• Including 42 m @ 1.20% Cu, 1764 ppm Mo, 0.23 g/t Au, (2.31% CuEq 2 ) from 188 m.

Mineralization is associated with a hydrothermal breccia controlled by the regional Pocuro Fault Zone with >10 km of strike with anomalous Cu and Mo results across the Caballos Project area.

Rhenium (“Re”) analysis of selected pulps (150 m - 246 m) by ICP-MS method returned 85 m @ 0.38 ppm Re, with maximum value of 2.42 ppm Re, which are among the highest in Chile.

Additional drill holes being planned to accelerate advancement of the Project.

Merlin Marr-Johnson, CEO and President of Fitzroy Minerals, commented: " This remarkable intercept from our very first hole at Caballos identifies the potential of a new and significant copper-molybdenum-gold-rhenium system. The hole at Chincolco, Caballos, intersected a thick package of intensely hydrothermally altered, veined and mineralized breccias and felsic intrusions and is located at the centre of a significant Cu-Mo anomaly that extends for over one kilometre along strike. The Pocuro Fault Zone hosts other occurrences of interest along the 12 km of strike within the Caballos project area, notably the Mule Hill anomaly about 5 km north of Chincolco.”

The stock is in a nice uptrend and although we are sitting on more that a double, I see this as a strong buy now that a discovery has been made. It is just early days with one drill hole so far. The steep correction in markets Friday gives an opportunity to buy post discovery cheaper than in a better market.

Gold is at new records this morning up about $+40 and I see the best buy now as

B2Gold - - - TSX:BTO NY:BTG - - - - Recent Price – C$4.15

Entry Price - $4.45 - - - - - Opinion – strong buy on this pull back

This market still amazes me as it is still punishing mine development stories. And in B2Gold's case even when the news is good. There was some parts of the news release that came out after close last Thursday that could be taken as negative, but the market missed something here and we should take advantage.

When compared to the Prior Report by Sabina Gold & Silver, the new B2Gold geological model used in the Back River Technical Report includes a revised methodology for mineral resource estimation which resulted in a reclassification of a portion of the previously reported Indicated Mineral Resources to Inferred Mineral Resources, through the application of more stringent specifications for drill hole spacing that B2Gold felt was more appropriate for the deposit.

Indicated Mineral Resource estimate of 3,560,000 ounces of gold (15.5 million tonnes grading 7.16 grams per tonne (“g/t”) gold.

Indicated Mineral Resource gold grade is a 16% improvement versus the Indicated Mineral Resource gold grade in the last published technical report on the Goose Project by the prior owner.

Average gold grade processed of 6.82 g/t gold over the Mineral Reserve Life of Mine, a 14% improvement compared to the Prior Report.

While the indicated number went down some, it has zero effect on the development and coming production. The Company continues to estimate that gold production in calendar year 2025 will be between 120,000 and 150,000 ounces and that average annual gold production for the six year period from 2026 to 2031 inclusive will be approximately 310,000 ounces per year.

What I think the market missed is this was just an update on reserves and resources, not on the feasibility so B2Gold just kept the same production numbers. However with higher grade, production numbers should be higher so I think B2Gold is ultra conservative here.

The market might have been expecting lower All in Sustaining Costs. B2Gold believes the weighted average AISC of approximately $1,360 per ounce from 2027 through 2031 is a better representation of long-term Goose Project potential AISC, to be supported by the goal of further expanding Mineral Reserves over time;

• Projected AISC of approximately $1,547 per gold ounce over the Mineral Reserve Life of Mine, which the Company anticipates will reduce with the delineation of additional Mineral Reserves through the conversion of existing Inferred Mineral Resources and the discovery of additional resources, both of which have the potential to extend mine life;

• Excluding the one-time costs to implement a renewable energy facility and optimize the power plant, Mineral Reserve Life of Mine AISC would be approximately $1,490.

• In order to optimize the long-term value of the Goose Project, B2Gold plans on initiating a study to explore adding a SAG mill to the processing flowsheet, to be paired with the existing 4,000 tpd ball mill;

• The Company believes that the addition of a SAG mill could result in an increase in the mill throughput from 4,000 tpd potentially up to 6,000 tpd. The Goose Project is permitted for mill throughput of up to 6,000 tpd.

I have no doubt increasing production with a sag mill will lower costs and will happen in a couple years. Also the AISC still compares well to B2Gold's current cost profile. Total consolidated all-in sustaining costs were $1,668 per gold ounce sold in Q4 2024. The total consolidated all-in sustaining costs for 2024 were $1,465 per gold ounce sold, within the annual guidance range of between $1,420 and $1,480 per gold ounce.

The above chart compares B2Gold to gold (GLD) in the last year and you can see that B2Gold's correction from the last October highs was over done. I also compare it with two other mid tier producers on our list, Torex Gold and IMGold. It is obvious B2Gold is a laggard and it should not be with a strong production growth profile.

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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.