Canadian investors are well aware that small and micro-cap mining stocks offer their portfolios a hedge against volatility in addition to considerable upside potential.
The hedge stems from miners’ exposure to their commodities of choice, which are the raw materials of industry, demand for which, whether gold, silver, copper, lithium and so on, should (eventually) be reflected in and support stock prices as economic growth trends higher over the long term.
The upside potential stems from small and micro-cap stocks’ high-risk/high-return profile, as well as each mining stock’s particular chances of making a discovery, one where the economics of extraction line up with favorable commodity prices to create sustainable shareholder value.
This two-way benefit, equivalent to having your cake and eating it too, seems to be gearing up for a moment in the sun, given the TSX’s highly uncertain trajectory over the past year:
The uncertainty can be chalked up to Bank of Canada interest rate hikes still requiring another year to trickle through the economy, while strong employment and ensuing consumer spending continue to argue against the idea of a near-term recession.
Predicting how the economy will affect the broader stock market becomes even more complex when we add Canadians’ high reliance on consumer debt to the mix, as well as weak business sentiment, energy price normalization, and pressure from grocery and mortgage inflation.
Rather than placing all your conviction on the upside or the downside, Canadian investors can look to mining stocks to capitalize on either eventuality. If the market dives into the red, small and micro-cap miners will work to shield your portfolio from losses, and will likely bounce back exponentially, given their key role in the industrial supply chain. If the market soars higher, these stocks will stand to soar beyond the broader market supposing they maintain solid operations, positive news flow and a focus on in-demand commodities.
Weekly Market Movers readers interested in putting this thesis into play can consider the following three Canadian mining stocks, each of which released news over the past week in the interest of shareholder value:
Midnight Sun Mining confirms high-grade drill intercepts at Mitu
Midnight Sun Mining (TSXV:MMA) discovered high grades during 2022 drilling on the Mitu Trend on its Solwezi Project in Zambia.
Highlights include 11.50 m at 1.41 per cent copper, 26.10 m at 0.32 per cent copper and 22.25 m at 0.39 per cent copper, which indicate the presence of large deposits.
CEO Al Fabbro confirmed the company “is seeing the right signs of similarities to big deposits in the neighbourhood.” This includes First Quantum’s Sentinel Mine, which produced 54,045 tonnes of copper in Q2 2023 and 242,451 tonnes in 2022.
He spoke with Sabrina Phillips about the news.
Midnight Sun’s Solwezi mineral exploration licenses are also directly adjacent to First Quantum’s Kansanshi Mine, the largest copper mine in Africa, affording investors a unique chance to participate in a company backed by a team with multiple discoveries and mines to its name.
Midnight Sun Mining stock (TSXV:MMA) is up by 84.62 per cent over the past year.
Altiplano Metals begins startup phase at El Peñón
Altiplano Metals (TSXV:APN) has finalized the commissioning stage at its El Peñón processing plant in Chile with first concentrate production expected later this month.
Management intends to process 5,000 tonnes of copper-gold-iron material per month to produce 300 tonnes of copper-gold concentrate and 1,800 tonnes of iron concentrate. The facility is approximately 15 km from the company’s Farellon copper, gold and iron mine.
Altiplano already has an offtake and loan agreement in place with ArrowMetals Asia at prevailing market prices.
Concentrate sales should provide Altiplano with added stability to pursue exploration and development opportunities, setting it apart from the majority of its competitors, who must resort to debt and share dilution to fund their operations. To this end, the company has generated more than US$12.1 million from the recovery and sale of more than 5.2 million pounds of copper from Farellon between Q1 2018 and Q1 2023.
President and CEO Alastair McIntyre spoke with Sabrina Phillips about the news.
Altiplano’s vertically integrated and self-funded exploration and processing operations afford it protection from economic downturns, and set it up to make acquisitions at bargain prices when there’s “blood in the streets.” Couple this well-oiled machine with a focus on gold, a safe-haven asset with millennia of history, and management’s multiple decades of experience, and it becomes easy to justify a high-growth story being undervalued by the broader market.
Altiplano Metals stock (TSXV:APN) is down by 47.92 per cent over the past year.
Q Battery Metals acquires Pontax River Lithium Project in James Bay, Quebec
Q Battery Metals (CSE:QMET) acquired the Pontax River Lithium Project in Quebec for 5.8 million QMET common shares.
Management interprets the project’s 101 contiguous mineral claims spanning 5,376 hectares as a likely site for LCT pegmatites and associated lithium mineralization.
Nearby operators include Patriot Battery Metals, which is overseeing its Corvette Property, one of the highest-profile projects in the global lithium industry.
Q Battery Metals’ geologic team is preparing for phase-I exploration in the Pontax River area with geologic mapping and prospecting scheduled for this summer.
CEO Richard Penn believes the company’s shares are attractively priced given Pontax’s prospectivity, as well as upcoming gold project development, which should provide investors with a diversified instance of mining stocks’ two-way benefit discussed earlier.
He joined Sabrina Phillips to discuss the news.
The company’s portfolio of base and precious-metal projects offers exposure to critical elements such as lithium, copper, nickel, cobalt, zinc, molybdenum and platinum group elements in the world-renown Abitibi Greenstone Belt region of Val D’or, Quebec. Each element’s diversified use-cases allow Q Battery to sidestep revenue concentration while potentially benefitting from multiple uncorrelated moonshot-like discoveries.
Q Battery Metals stock (CSE:QMET) is down by 82.5 per cent over the past year.
Join the discussion: Find out what everybody’s saying about public companies and hot stock topics on Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Midnight Sun Mining, Altiplano Metals and Q Battery Metals, please see full disclaimer here.
