Hope you had a good Easter weekend.
As I promised last Wednesday, I have more details about my upcoming gold recommendation, which I will send to my Golden Portfolio IV members this week.
I mentioned how the guys running this new firm are all stars in the business of gold mining.
What I didn’t mention was that besides their professional track record, this management team also has a significant 22% ownership of outstanding shares.
In a $60 million company, their interests are aligned with shareholder interests.
That’s because this company started out with ~$16 million in financing out of the gate, which they used to buy their project. Now they’re down to under $3 million. They don’t have the time/money to pay management a fortune – unless the company succeeds.
As I wrote last week, this kind of gold management team doesn’t get out of bed for pedestrian opportunities or limited upside. They’re looking to spend the next 5 years developing a world-class gold project that will deliver significant wealth for themselves.
With their cash balance, they’ve burned the boats.
They’re not going to be satisfied collecting a small salary over the coming years: they need this project to work.
That’s the kind of aligned incentive you want from gold miners. You want to sink or swim with leadership.
To be clear: this is still an early-stage opportunity. In the world of gold mining, they’re in phase 1 of exploratory drilling on the property, which is a significant size.
The next stage will be to update the mineral resource estimate, and then begin phase 2 drilling in preparation for mine development – which culminates in a final yes/no with the completion of a pre-feasability study.
Then there’s permitting, mine construction, financing, etc. before a single ounce comes out of the ground.
These stages all take months. Some take years. But my early projection (based on the initial economic assessment) is that it’s a $480 million net asset value.
Today, the company sells for about $60 million. And remember: this company is undergoing 100,000 meters of exploratory drilling, right now. They could find a lot more gold in the coming months that would completely change my fair value estimate.
If you’re looking for a chance to turn $1 in $8 in the gold mining industry, you almost always have to find this kind of early stage company.
In 6 months, 12 months or 2 years from now, we’ll have much more information about this firm and its gold story will be better defined. That means less risk… and less reward.
I’m adding this firm to my GPIV service[2.1], which is my lowest price service dedicated to finding some of the most compelling opportunities from across the world of gold investing.
This company represents the micro-cap aspect of the gold mining business. I believe it will end up being a successful venture – because I think this team in particular has what it takes to make the project work.
But it’s just one company in a smaller portfolio of different kinds of gold stocks – including royalties, mid-caps and producers. Right now, in my GPIV service I have open gains of 646%, 93%, 2,044%, 67%, 23%, 101% and 54%.
Some of these companies have been in the portfolio for years. Some for months. But they’re all currently under my fair value estimates…
Take a look at my best current GPIV offer to see for yourself – and to be among the first to see my next portfolio recommendation when it comes out this week.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio