We’re in Stock Pickers Market, TSX Venture Could Trade Sideways for Six Months

The TSX Venture Composite Index is likely to trade sideways for the next six months. For NIA this is the perfect type of environment because we focus on real research and identifying companies that have genuine development potential versus those that are simply "promotional stories" with little chance of becoming real mines.

Although the long-term odds remain high that gold could eventually reach $6,500 per oz, even a correction to $2,700 per oz would not necessarily derail the upside potential for undervalued gold exploration companies. That’s because most sectors of the market remain extremely overvalued, while many quality gold development companies continue to trade at deeply discounted valuations. In our view, these are among the only truly undervalued areas left in the entire market. In fact, it is much easier for us to say Viva Gold (TSXV: VAU), Lahontan Gold (TSXV: LG), and First Mining Gold (TSX: FF) will all be trading significantly higher one year from now than it is to confidently predict where the price of gold will be.

While the market often assigns higher valuations to companies with the most promotion rather than the best projects, these types of inefficiencies create opportunity for investors willing to do proper due diligence. A company like Viva Gold (TSXV: VAU) stands out as having an extremely high probability of eventually being developed into a producing mine, yet it currently trades at a very modest valuation compared to many other exploration-stage companies.

For a major producer like Kinross Gold (KGC), acquiring a project such as Viva Gold's Tonopah asset could make tremendous strategic sense. In fact, paying a substantial premium to acquire Viva Gold (TSXV: VAU) could still represent an attractive transaction for Kinross relative to the long-term value the project could provide.

We don't think the TSX Venture's lows from 2023 will ever be seen again, but it has been up for so many months in a row that there is likely to be resistance around the 2021 highs. Ultimately, it will break out to well above the 2021 highs, but probably not immediately.

This means that in 2026 it will no longer be possible to blindly throw a dart at high-risk gold stocks and make money. Instead, capital will increasingly flow toward companies that have projects capable of actually advancing toward production.

Kinross Gold's Round Mountain Phase W (the final major open-pit layback) is scheduled to conclude in 2025, which is expected to create a near-term production dip. Future phases… Phase S and the Phase X underground development… are designed to sustain output later in the decade, but both involve transitional risk, capital intensity, and potential grade variability. The Gold Hill deposit will add longevity but is smaller and later-stage.

This is where Viva Gold's Tonopah Project becomes strategically important. Tonopah sits in the same district as Round Mountain and is located roughly a 20-minute drive away, making it a logical potential satellite deposit that could help extend the life of the operation. It would not be surprising to eventually see Tonopah supply material to Round Mountain through a transaction. Importantly, even without a near-term acquisition, we see limited downside risk for Viva.

Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. NIA’s President has purchased 100,000 shares of VAU and may buy more shares or sell his shares at any time. NIA’s President has purchased 200,000 shares of LG in the open market and intends to buy more shares. NIA has received compensation from LG of US$30,000 cash for a three-month marketing contract. NIA has received compensation from FF of US$50,000 cash for a six-month marketing contract. This message is meant for informational and educational purposes only.