Kermode Resources (KLM.V) offers an attractive risk/reward setup

Kermode Resources (KLM.V) is a junior mining company engaged in the exploration, acquisition and development of natural resource properties in Canada. It holds a 15% interest in the Eastgate Gold property located northeast of the Rawhide mine and east of Fallon in Churchill, Nevada County. The company has also entered into an option agreement to acquire a 100% interest in the Vidette Lake gold project in British Columbia.

The company has a market capitalization of $2.183 million

Recent news has detailed the initial geochemical sampling results as Letter of Intent (LOI) due diligence for the Eye Patch Project which resides in Nevada. For you silver fanatics (like me), a dosage carried up to 2,605 grams per ton silver g/t.

“In addition to follow-up sampling at the Shomaker Mine face and on the road at the Green Monster Mine, I would like to undertake initial mineralogical and metallurgical testing of high-grade material from the old mine to better understand what the ancients may have done to recover the antimony,” commented Peter BellChairman and CEO of Kermode.

Kermode has signed a letter of intent to lease the Rye Patch Mine silver mine to the Gold Range company. The project includes two land positions approximately 45 km apart. For more information, I suggest reading Kieran Robertson’s great breakdown of geochemical sampling news which can be read here. The two terrestrial packages are named ALPHA and WS. The latter is made up of ten claims in a set covering the Green Monster silver mine, which was active intermittently from 1936 to 1967.

Map of the WS project

The idea is that there is a resource of gold and silver that previous companies and explorers have not discovered. Kermode resources hope to profit from this neglect.

Look at scan holes S-02 and R762. Some nice silver finds there, and hopefully the resources expand.

TradingView Chart

TradingView Chart

When it comes to gold and silver, readers know I’m a huge fan. Not only are they the trumps to bet against the debt-based economic system and the coming crisis of confidence, but they will trade in inflation to protect one’s purchasing power. Let’s also add geopolitical uncertainty to the mix.

The metals action has taken some traders and investors by surprise recently. They don’t seem to be anticipating 6 interest rate hikes this year. If rates were to be raised multiple times, one would expect the US dollar to break out and gold and silver to crash. They are holding strong, and more importantly, they are still holding above our main support zone.

Still good for anyone bullish in metals and mining stocks.

Before looking at the chart of Kermode Resources, I must say that this is a company that is still in its infancy. For long-term investing, I prefer royalty and streamers and more advanced mining stocks. But if gold and silver rise, junior stocks will follow, meaning big gains can be made. These stocks may be risky, but the return will be excellent.

When it comes to risk versus reward, I like Kermode Resources with a market cap of just over $2 million and trading at the $0.02 level.

TradingView Chart

Let’s start with a bigger picture. I really like the structure I see. We all know that markets move in three ways: a downtrend, a range, and an uptrend. We had our downtrend, then we hovered between 2015 and 2021, then recently broke out. The breakout of the range indicates that a new uptrend is beginning, and we should expect multiple higher highs and lower lows. Especially if gold continues to catch a bid.

However, this new uptrend is currently at an important inflection point. We are retesting the $0.02 zone. What was once resistance now acts as support.

TradingView Chart

Zoom in a bit closer, and we can see the battle unfold at $0.02. We’ve bounced here twice in the past few months. Can we do it a third time?

The stock doesn’t see volume every day, and a few thousand dollars will be enough to keep it going. To be honest, I wouldn’t be surprised to see management buy more here and hold the stock above $0.02. From a risk versus reward perspective, this looks very attractive. Can the stock go down to 0? Sure, but it can also easily go back to $0.04 and up. If the stock falls to $0.01 or 0, you risk 50% of all your money, but the upside can be a return of several hundred percent.

All it would take is good news in the form of tests. Yet this is the bet of young miners and explorers. You just don’t know what might be in the ground. If there is something, the stock can soar. If there isn’t… well, the stock may just keep on fluctuating. This is why I prefer to invest the majority of my money in more advanced companies, miners, royalties and streamers. But these juniors will also rally if gold and silver prices take off.

Comments are closed.