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Mickey Fulp Cautiously Optimistic About the Resource Market Recovery But Bullish On Uranium

Resource investors are on the edge of their seats. While hopeful for a dramatic market recovery (perhaps to erase the massive declines they’ve faced in the past couple of years), they’re worried that there may be further declines. Everything is tentative and markets are moving slowly. It’s hard for investors to know what to speculate in.

At PDAC 2014 in Toronto Canada, we spoke with Mickey Fulp, the Mercenary Geologist, who shared his observations and insights with us.

First, Mr. Fulp gave us an overall view of the market and then listed several favorite commodities, as well as several companies that he holds and covers.

“The junior market is better,” Mr. Fulp said. “We hit the low last summer at 860 on the Toronto Venture Exchange. We tested near that low in mid-December with tax-loss selling and the Index has been on the uptick since then. Starting with the Cambridge House Conference in January, I thought there was a buzz looking for a better market. That’s continued. We hit over 1030 on the Venture Exchange on Friday – the day before PDAC started. From that point of view, we’re optimistic; we’re encouraged.”

But investors shouldn’t get too excited just yet. Mr. Fulp added this cautious disclaimer: “We’ll see if it will continue. We’re a couple of months into the rally now but we need to make it a month or two past Labor Day before we’ll know if the junior resource sector has taken a turn for the better or if this is a false start.”

Later, Mr. Fulp added, “It looks like the market is turning for the good companies but that doesn’t mean it is going to be a wide-based rally. I think most juniors will continue to suffer but the cream is rising to the top. If this recovery is real, it will be a relatively long time coming. I think we’re going to see ups and downs in the coming months and through the remainder of the year. That said, there is money available now for good companies that wasn’t available a year ago.”

Next we talked about Mr. Fulp’s feelings on some key commodities.

“I’m less bullish in the precious metals,” said Mr. Fulp. “They’ve been somewhat range-bound, although gold looks like it may stick about $1300/ounce for a while. That’s probably because of geopolitical considerations in various parts of the world and is supported by physical buying in China. The safe-haven fleeing to gold and the physical buying coming out of China is positive but I still expect gold to be relatively range bound this year.”

There are several commodities that Mr. Fulp is particularly bullish about.

“I’m a copper bull in the medium and long-term,” Mr. Fulp said. “Copper has retained a range bound price over the past year. I cover a couple of copper companies,”

The first company he told us about, Curis Resources (TSX: CUV), “is ready to build an ISR mine and processing facility in Arizona pending one more permit,” he reported. The second company is Avrupa Minerals (TSX-V: AVU). “They recently announced a very high grade polymetallic massive sulphide intercept in the Pyrite Belt of Portugal, along with a major partner. That drill hole intercept was under 100 meters of cover so it was a blind discovery. They did very good geological work to hit that zone and it runs 11 meters of over 2% copper, over 4% lead, significant zinc, significant silver, and a good grade of tin. That’s a pretty monumental discovery. It’s the first new discovery in the district in two decades.”

One commodity that doesn’t get a lot of attention is tungsten. “I still like tungsten,” said Mr. Fulp. “Nothing has changed my opinion of tungsten over the past two years. My choice is Blackheath Resources (TSX: BHR). I remain a dedicated shareholder of that company, although I do not cover it at this particular time. As for other tungsten plays, I have not found anything else that fits my criteria.”

There is one commodity that Mr. Fulp is particularly bullish on. He told us: “I’m most bullish on uranium of all commodities at this time. The spot price has not moved but equities have moved, in particular, the uranium producers. I follow US producers quite closely but not the Canadian producers.”

Mr. Fulp listed 3 uranium companies he likes: “One has done quite well – we picked it 2 months ago, Energy Fuels Inc. (TSX: EFR), and it is up over 75% in that period of time; my subscribers are quite happy about that. This past Friday we picked Uranium Energy Corp. (NYSE MKT: UEC) and initiated coverage on that company. It is already up about 5% since the pick was made so that’s encouraging. Both of those companies are sponsors of my website and I’m a shareholder so I’m obviously financially biased about them. The other one that I own but do not cover is Uranerz (TSX: URZ), a soon to be an ISR producer in Wyoming. “

Mr. Fulp outlined an area of discovery that uranium-focused resource investors might be interested in: “The Southwest Athabasca region deserves a look. I’m paying attention. This new discovery looks like it’s going to be high grade and contain significant pounds of uranium. But it’s going to take a lot of pounds of high-grade uranium to justify building a mill in the area. That’s a long term process – probably 15 years out before we see production there. But it’s generated an area play. And other juniors surround or are adjacent to the Patterson Lake South discovery. There will be ongoing drilling now so we’ll be on the lookout for more successes in that part of the world.”

Even with more bullishness than we’ve seen in a while, Mr. Fulp is always careful to caution those who are eager to jump into the market: “We’re getting tremendous rallies among some of the better-run advanced exploration juniors but I would urge speculators to always proceed with caution and do good fundamental research on any company you are considering.”




Mickey Fulp:



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