{"id":1166240,"date":"2020-02-18T10:42:28","date_gmt":"2020-02-18T16:42:28","guid":{"rendered":"https:\/\/oilandgas-investments.com\/?p=32151"},"modified":"2020-02-18T10:42:28","modified_gmt":"2020-02-18T16:42:28","slug":"this-low-cost-fast-payback-asset-is-what-the-market-wants","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1166240","title":{"rendered":"This Low-Cost, Fast-Payback Asset Is What The Market Wants"},"content":{"rendered":"

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I believe that we are heading into a golden age for junior gold miners.\u00a0Gold\u2019s short, medium and long term charts look very good.<\/div>\n
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And importantly \u2013 the sector has been starved for capital for a decade.\u00a0Despite gold prices being over $1,000 per ounce the capital markets completely deserted this sector for years.<\/div>\n
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It has allowed the great entrepreneurs of this industry to move in and pick up advanced stage assets for literally pennies on the dollar.\u00a0 Companies with known and proven resources ready to go into production–but with bills they could no longer pay \u2013 created desperate sellers.<\/div>\n
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And one junior management team \u2013 who have put TEN mines into production \u2013 was able to buy one. They had to move fast \u2013 and so they used their own capital to acquire it.<\/div>\n
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Then they put this advanced stage asset into a very low market cap company. In fact, the market cap is SO low \u2013 their first year cash flow dwarfs their current valuation.<\/div>\n
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That’s where The Big Money is in gold right now \u2013 a great asset run by a great team that will generate multiples of cash flow compared to current market cap.<\/div>\n
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In tomorrow’s email, I’ll tell you the name and symbol of this tightly structured junior, which can put their high grade heap leach gold mine into production for as low as US$25 million. Other similar mines in the area produce for roughly US$700\/oz, which would generate roughly US$40 million in cash flow–starting in 2022.<\/div>\n
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This is a near-perfect gold asset, ready for production. But what sold me on the stock was the management team. They’ve put a combined TEN mines into production, raised hundreds of millions of dollars in the process and this will be \u2013 by far \u2013 the simplest, cheapest, and most lucrative one they have ever done.<\/div>\n
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Management recognized a high quality asset when they first saw it: they paid $6 million of their own money to acquire this property where $20 million had already been invested. It has a ready-to-go oxide asset that can quickly go into production.<\/div>\n
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As they execute on their simple plan, I expect the Market to reward them quickly. This asset has exactly what I want to see in a junior miner:<\/div>\n
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Fast path to cash flow<\/strong> \u2013 60,000 to 70,000 ounces of production starting in 2022<\/p>\n

Extremely low capex<\/strong> \u2013 Just US$30 million required to get the project into production<\/p>\n

Large profit margins<\/strong> \u2013 Other, similar mines in the area are producing for $700 per ounce versus $1,600 per ounce gold price<\/p>\n

High grade<\/strong> \u2013 Twice the grade of gold of an average open heap leach pit<\/p>\n

Extraordinarily fast payback<\/strong> \u2013 Capital can be recovered in MONTHS \u2013 well under a year at current prices.<\/p>\n

North American operating location<\/strong> \u2013 No exotic location risk<\/p>\n

The economics of the project should be spectacular \u2013 and perfect for a junior operator.<\/p>\n

This is exactly the kind of simple low-capex, fast-payback and cash-gushing project that the Market now loves.\u00a0<\/p>\n

Management believes the current resource will support 60,000 plus ounces of production per year. IF they can produce at a $700 per ounce mining cost \u2013 that’s what other mines in this region are producing at \u2013 this company could be generating $40 million of annualized cash flow starting in 2022\u2026 which is more than the market cap of the entire company today.<\/em><\/p>\n

Everything about this project looks like a homerun.<\/p><\/div>\n

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What You Need To Know \u2013 Extreme Credibility<\/strong><\/span><\/h3>\n
Everything about this junior gold stock has me excited.<\/p>\n

The project, the gold price, the resource upside.\u00a0 In the end though, what gets my attention on any junior operator is the track record of top management \u2013 which is where this company really stands out.<\/p>\n

You just don\u2019t see people like this running a company with a $25 million market cap.\u00a0 You also don\u2019t usually see them doing these things:<\/p>\n

1\/ \u00a0The Chairman \u2013 was previously the CEO of a world class mining company where he led the company to a tenfold increase in market cap, creating $4 billion in value for shareholders.<\/em>\u00a0 In addition to that he has founded and sold another junior company for $250 million and built multiple mines.<\/p>\n

2\/ \u00a0The CEO \u2013 is also a successful company builder, taking his last company public at 15 cents and it\u00a0 went to over $4.60<\/u> <\/em>per share<\/strong>.\u00a0 More telling \u2013 he used his own personal cash to lock down this asset so that this opportunity didn\u2019t get away.<\/p>\n

3\/ \u00a0None of the top executives are taking salary, they are taking stock.\u00a0 There is no better indication of their belief in the project than that.\u00a0 Shareholders can\u2019t ask for a team that is more fully aligned with them.<\/p>\n

4\/ \u00a0After 17 years as a founding director at a much larger nearby company (that stock went to $19!!!) the Chairman resigned to take the lead role at this tiny company operating in the same region \u2013 a pretty solid hint at the value the team believes they have.<\/p><\/div>\n

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WHAT IF I\u2019M WRONG?<\/strong><\/span><\/h3>\n
I\u2019m always looking for what can disrupt my thesis.\u00a0 And here, there definitely could be one problem: \u00a0This mine could be much larger and much higher grade than I thought.<\/p>\n

You see, heap leach gold mining is very low cost \u2013 but gold recoveries are not always high. The official resource estimate here only factors in 7 of 17.5 kilometers of gold strike; only 40% of what is there.\u00a0 And that resource estimate uses a pessimistic gold grade of 0.5 grams per tonne \u2013 which there is very good reason to believe is far too low.\u00a0 The average grade here so far is much closer to 2.0 g\/t \u2013 that\u2019s a very high grade heap leach!<\/p>\n

But it does strongly hint that the current resource estimate is potentially too low.<\/p>\n

Since the start of 2020 this little company has been releasing updates on mineral sampling that it has been doing on the property.\u00a0 The grades being reported in the sampling are multiples of what we see in the existing resource. \u00a0Plus, much of the sampling being done is from outside the scope that prior resource estimate.<\/p>\n

Yep, this fast payback plan would hit a roadblock if there was 2-4 million ounces of high-grade oxide gold here \u2013 that, IMHO, every mid-tier producer would pay up well over the US$95\/oz average to buy out.\u00a0 It\u2019s in North America and it\u2019s oxide (=cheap mining costs, v. sulphide) That\u2019s my downside<\/u>!<\/em><\/div>\n

Do Not Miss My E-Mail Tomorrow<\/strong><\/span><\/h3>\n
I personally prefer a low capex, fast payout cash flow mining story. Look folks, I can hardly find an oil and gas play that pays out in months.\u00a0 When I do, I buy it. I have NEVER heard of a gold mine paying its costs back in months.<\/p>\n

Tomorrow I\u2019m going to give you all of the specifics that you need on this junior gold stock.<\/p>\n

First<\/strong>, the name and ticker of this junior miner.<\/p>\n

Second<\/strong>, the detailed background of this management group that is overqualified to be playing in the micro-cap sector<\/p>\n

Third<\/strong>, an overview of this project that could be cashing flowing more than the current market cap of the stock within 20-24 months.<\/p>\n

Fourth<\/strong>, the upside that this stock could have if it does discover 2-4 million ounces of high grade oxide gold.\u00a0And lastly \u2013 this company is fully cashed up with millions in the bank.<\/p>\n

Watch for my e-mail tomorrow!<\/u><\/em><\/p>\n

Keith<\/em><\/div>\n","protected":false},"excerpt":{"rendered":"

  I believe that we are heading into a golden age for junior gold miners. Gold’s short, medium and long term charts look very good.   And importantly – the sector has been starved for capital for a decade. Despite gold prices being over $1,000 per ounce the capital markets completely deserted this sector for years.   […]<\/p>\n","protected":false},"author":19,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[529],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1166240"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1166240"}],"version-history":[{"count":2,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1166240\/revisions"}],"predecessor-version":[{"id":1171534,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1166240\/revisions\/1171534"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1166240"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1166240"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1166240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}