Gold Stock Report #2 (20 stocks)

Market update: The gold price in the past two weeks hit a high of $1540. I’m now using $1500 for the gold price in my leverage calculations. Gold has broken out to all time highs in most currencies except the US Dollar. The gold price may well run to break out over $1950 USD to all time highs in the USD as well. The world produces about 80-90 million ounces of gold, with US investors buying only about 2 million ounces. US investors do not yet drive the gold price, and when it begins to, I think the gold price will run far higher than $2000/oz.

If you find this information useful, please consider giving me a donation, or buying my stock picks of the companies that profile favorably in this list. https://www.paypal.me/JasonHommel

Explanation and Disclaimers: The list of stocks is sorted by the leverage calculation, from lowest to highest. The Leverage calculation is the total value of the gold resources divided by the market cap. It’s one measure of what you get compared to what you are paying. You tend to get more of what you are paying for, with a higher Leverage calculation.

The market cap (MC) is the shares issued and outstanding, multipled by the share price in USD. It is a value of the company. I am not calculating based on warrants and options issued which is called the fully diluted share number.

The Leverage calculation is only a preliminary way to value a gold exploration company. Ultimately, profits tend to drive stock prices.

The Leverage calculation does not take into account whether the resources are economic to mine or not. Nor does it take into account the Capex, which is the cost to build a mine. Resources are generally determined to be economic at the point of a full feasibility study, at which point “measured and indicated” resources are upgraded into “proven and probable” resources. Higher grade resources tend to be more likely to be economic, but not always. “g/t” stands for “grams per metric tonne”, also known as parts per million. Underground mining is more expensive than open pit. Other highly variable costs include things like labor, the oil price (roughly 30% of open pit costs), proximity to power, transport to milling, etc.

Where applicable, I have taken Capex (the cost to build the mine) into account, adding it to the Market cap, which falsely assumes a company will raise 100% of the Capex by issuing shares at the current price. In reality, there are three major ways to finance: 1. a Joint Venture with a Major or being acquired by a Major, 2. debt financing which can include locking in a gold price or hedging, and 3. issuing stock. Stock being issued usually accounts for about half of financing, and often takes place at 80% of the current share price. Each method of financing has benefits and drawbacks, and I don’t control what a company does, so don’t email me a rant at me about this. I prefer no JVs, no debt, and just issuing stock, but that’s my preference.

Some stocks have no capex, because they are already producing. That’s great! Others have no capex, because they have not calculated one with a feasibility study yet.

Other methods to value gold companies are based on the cost of production, the number of gold ounces produced, current or forward P/E ratios, the life of the mine, actual realized profits, etc.

Mining may suffer from many difficulties: In ground resources may have been overestimated. The gold price can drop. The gold price can go up and cause hedging losses if a company pre sold gold ounces to finance the mine. There can be worker strikes, nationalizations, revolutions, revolt, war. There can be natural disasters, man made disasters, mine cave ins, pit wall collapses.

What is “pump and dump”? https://www.sec.gov/fast-answers/answerspumpdumphtm.html Warning, do not defame me by falsely accusing me of pump and dump, as such could expose you to a defamation for libel and slander lawsuit. Pump and dump consists of lies, as the SEC warns ““Pump-and-dump” schemes involve the touting of a company’s stock (typically small, so-called “microcap” companies) through false and misleading statements to the marketplace.” In contrast, I’ve done what I can to verify that all this information is true and correct to the best of my ability, including providing the links to company pages where you can verify the information. I can not guarantee that the company is not lying to us all.

These calculations are reasonably accurate as of 8-15-2019. Gold Price? $1518/oz. Many things may change these valuations. Stock prices may have already moved. Companies can issue more shares. Companies may find more resources. Feasibility studies may change the economics, or lower the amount of resources mined. Companies may get acquired, and default on promises. I may have made errors. These kinds of lists are labor intensive to produce, yet rapidly lose quality and relevance over time as so many things change. Therefore, do your own research and due diligence to confirm.

This week, I added Orlamining, Luminagold, Perseus mining, Seabridge, McEwan Mining, k92mining, and Northern Dynasty. And discontinued Gowestgold.

https://www.orlamining.com/
https://www.orlamining.com/index.php/investors/share-structure
179 million shares outstanding
https://finance.yahoo.com/quote/ola.to/
x $1.45 share x .76 CDN/USD
=$197 million MC
https://www.orlamining.com/index.php/projects/reserves-and-resources (Mexico & Panama)
Measured & indicated: 10,159,000 oz. gold at 0.5g/t (low grade) x $1400 = $14,224 million
Inferred: 1,709,000 oz. gold x $1400 = $2,393 million
Total: $16,617 million
Pre feasibility Capex: $123 million
Mine Plan, 97,000 oz. over 6.8 years = 659,600 oz. gold. x $1500 = $989 million. But this mine plan only produces 6% of the resources?!?! That’s so low!
Leverage: 84
Leverage with capex and MC: ($123M + $197M = $320M) 52! Still good.
Leverage with capex, MC and given gold to be produced in mine plan: 3 (Worst leverage calculation on the list.)

https://luminagold.com/
https://luminagold.com/investors/stock-information
309.5 million shares outstanding
https://finance.yahoo.com/quote/lum.v
$.59 share x .76 CDN/USD
= $139 million MC
https://luminagold.com/assets/docs/presentations/LumGLD_Aug_Web-1565643430.pdf
p.6: Cangrejos in Ecuador — p.23 Constitutional requirement for Government to receive 50% of project benefit (NPV)
Inferred: 8.5 Moz Gold @ 0.65 g/t x $1500 = $12750 x 50% NPV = $6375 million
$569/oz AISC net of copper
p. 19 Capex: $831 million
Leverage: 45
Leverage with capex: $831 + $139 = $970 million = 6
Socialism destroyed the mining sector in Ecuador. The government is turning away from socialism.
This is a great read: https://www.mining-technology.com/features/ecuador-mining/

https://www.northerndynastyminerals.com
https://www.northerndynastyminerals.com/site/assets/files/4590/ndm_april_2019_final_factsheet.pdf
345.6 million shares outstanding
https://finance.yahoo.com/quote/nak/
$.66 share
=$228 million MC
https://www.northerndynastyminerals.com/site/assets/files/4617/northern_dynasty_june_2019-web.pdf
Pebble project:
107 million oz. gold at 0.3-4 g/t (VERY LOW GRADES) x $1500 = $149,800 million
Caution: https://www.bloomberg.com/news/articles/2019-04-30/industry-watchdog-alleges-northern-dynasty-misled-investors
But the 20 year mine plan is to mine only 7 million oz. gold. x $1500 = $10,500
p. 11 of presentation above 20 x 350,000 oz/year.
After 20~ years of development, and major partners leaving, the Capex, or cost to build the mine, remains unknown or not listed. I do NOT recommend buying Northern Dyanasty Minerals.
Leverage: 46
Leverage with an est. $1 billion (generous low ball?) added to the market cap, (10.5 billion / 1.2 billion), the leverage drops to 9.

http://www.sabinagoldsilver.com/
http://www.sabinagoldsilver.com/assets/docs/presentations/Corporate%20Presentation%20July%2029%202019.pdf
293 million shares outstanding
https://finance.yahoo.com/quote/sbb.to/
x $1.68 share x .76 CDN/USD
=$374 million MC
Goose Gold Project, Black River, Canada
Permitted. Open Pit, high grade, still working on capex.
7.3 million oz. gold at 6g/t x $1500 = $10,950 million
Mine plan to mine only 2.3 million oz. at 6g/t x $1500 = $3450 million
Leverage from mine plan: 9.2 (with capex, will be worse.)

https://www.k92mining.com/
209 million shares
https://finance.yahoo.com/quote/knt.V/
$2.56/share x .76 CDN/USD
$407 million Market Cap
Owns an abandoned Barrick Mine
Current production, at “low” cash costs, but raised $10 million in issuing shares?
Why if they are supposedly earning cash?
2018 production – 47,500 ozs AuEq per annum @ Cash Costs >$600/AuEq oz & AISC >$800/AuEq oz
+12 g/t AuEq
Current Resources ~0.63 Moz AuEq M & I
and ~2.6 Moz AuEq Inferred Resource
total: 3.23 million oz. Gold “Equivalent”. x $1500 = $4,845 million
No Capex needed. Producer.
Leverage: 11.9

https://www.marathon-gold.com/
https://www.marathon-gold.com/site/assets/files/4296/2019-04-11-fact_moz.pdf
160 million shares outstanding
https://finance.yahoo.com/quote/MOZ.TO
x $1.34 share x .76 CDN/USD
=$163 million MC
https://www.marathon-gold.com/projects/flagship-project/valentine-lake/project-highlights/
4.2 Moz gold resource at 1.8g/t x $1500 = $6300 million
Average annual production: 225,100 oz/ year.
Working on feasibility study.
Capex: $355 million
Leverage: 38.6
Leverage with Capex and Market cap ($355 + $163 = $518): 12

http://perseusmining.com/
http://perseusmining.com/share_capital.10.html
1167 million shares
https://finance.yahoo.com/quote/pru.to
$.73 share x .76 CDN/USD
= $647 million MC
http://www.perseusmining.com/aurora/assets/user_content/02094384.pdf
West African gold producer, growing to 500,000 oz./yr by 2022
Set to produce 280,000 oz., 2019.
AISC of $1000/oz.
Forward Earnings: $500 net x 500,000 = $250 million.
Forward P/E: 2.6
p.11: Reserves and resources 5.5 million oz. x $1500/oz. =$8250
No capex needed. Producer.
Leverage: 12.7

https://www.vitgoldcorp.com
https://www.vitgoldcorp.com/site/assets/files/6373/190710-vit_corporate_presentation-july_2019.pdf
p. 23: 786 million shares outstanding
https://finance.yahoo.com/quote/VIT.V
x $.485 share x .76 CDN/USD
$290 million MC
Resources of 2.6 million oz. of gold at 0.7g/t.
2.6 million oz. x $1500 gold = $3900 million
Mine construction 95% complete!
Leverage: 13.4
Victoria is a near term producer, and could be valued another way: https://revealingfraud.com/2019/07/silver-gold/victoria-gold-corp-forward-p-e-of-2/

http://www.gowestgold.com/
I will no longer track this stock. They were served a default notice, and their stock price collapsed:
https://finance.yahoo.com/news/pgb-timmins-holdings-delivers-default-162926264.html
A lower stock price may give them more favorable coverage here, which is not the intent if they are in default.

http://www.treasurymetals.com/s/Home.asp
http://www.treasurymetals.com/s/share_info.asp
145 million shares outstanding
https://finance.yahoo.com/quote/tml.to/
x $.35 share x .76 CDN/USD
=$38.6 million MC
http://www.treasurymetals.com/i/pdf/ppt/2019-06-28-TML-CP.pdf
Goliath Gold Project in Ontario, Canada
1.46 million oz. gold at 2-3g/t x $1500 = $2190 million
Capex C $133 million .76 CDN/USD = $101 million
Leverage: 56.7
Leverage with Capex ($38.6 + $101 = $140 million) 15.6

http://puregoldmining.ca/
http://puregoldmining.ca/investors
354 million shares outstanding
https://finance.yahoo.com/quote/PGM.V/
x $.66 share x .76 CDN/USD
=$177.5 million MC
http://puregoldmining.ca/sites/default/files/uploads/presentation/file_upload/Pure_Gold_Mining_Corporate_Presentation_Aug_2019_v.1.pdf
Madsen Red Lake Mine:
Probable Mineral Reserve of one million ounces at 9 g/t Au
Indicated: 2.1 million + 0.5 inferred = 2.6 million oz. x $1500 = $3900 million
Capex, $95 million Cdn x .76 CDN/USD = $72 million
Leverage: 22
Leverage with capex: (72 + 177 = $249 million) 15.7

https://www.goldsourcemines.com/
https://www.goldsourcemines.com/investors/share_structure/
314 million shares outstanding
https://finance.yahoo.com/quote/gxs.V/
x $.125 share x .76 CDN/USD
=$30 million MC
Eagle Mountain in Guyana p.7:
https://www.goldsourcemines.com/_resources/presentation/Corporate-Presentation.pdf
total indicated & inferred:
380,000 oz. gold at 1.3g/t x $1500 = $570 million
Pre Feasibility study in progress, no capex.
Leverage: 19

FIRST PAID STOCK PICK:
Market Cap, $30.9 million USD.
Project is permitted.
Located in South America.
Project backed by an investor with a net worth of $25 billion.
Resources of 2.4 million oz. of gold at 4g/t.
2.4 million oz. x $1500 gold = $3,600 million
Leverage: 116
Leverage with Capex of $110 million added to MC ($141) 25.5
For the name of this stock send $58 to:
https://www.paypal.me/JasonHommel

https://www.aurynresources.com/
https://www.aurynresources.com/investors/share-structure/
95.2 million shares outstanding as of July 11th.
https://finance.yahoo.com/quote/AUG/
x $1.37 share
= $131 million MC
Three Bluffs resources:
1,244,000 oz. gold resources at 7.7 g/t
Combined Homestake & South Reef resources:
1,057,000 oz. gold resources at 5 g/t
Total gold: 2.3 million x $1500 = $3450 million
Leverage: 26 (capex not included or calculated)

SECOND PAID STOCK PICK:
Market Cap, $22 million USD.
Resources of 9 million oz. of gold at 0.8g/t (Huge project, higher grades than Northern Dynasty and Seabridge)
x $1500 gold = $13,500 million
Leverage: 613
Leverage with capex of $464 million added to the market cap ($495): 27
For the name of this stock send $60 to:
https://www.paypal.me/JasonHommel

https://mcewenmining.com/
https://www.mcewenmining.com/investor-relations/stock-information/default.aspx
362 million shares outstanding
https://finance.yahoo.com/quote/mux.to
x $2.44 share x .76 CDN/USD
$883 million MC
https://s21.q4cdn.com/390685383/files/doc_presentations/mcewen_factsheet.pdf
M & I gold: 7.5 million oz.
Inferred gold: 5.8 million oz.
Total gold: 13.3 million oz. x $1500 = $19,950 million
M & I silver: 111 million oz.
Inferred silver: 151 million oz.
Total silver: 262 million oz. x $17 = $4454 million.
Total gold and silver: $24,404 million
Producing 190,000 oz. gold equivalent, at $1061 AISC. (all in sustaining costs)
Rough profit: $76 million.
PE: 11.6 (High)
Leverage: 27.6

https://makominingcorp.com/
https://makominingcorp.com/_resources/factsheets/factsheet.pdf
313 million shares outstanding
https://finance.yahoo.com/quote/MKO.V/
x $.125 share x .76 CDN/USD
=$29.7 million MC
Both In-Pit and Out of Pit at San Albino, Mexico:
Indicated and Inferred
Total: 940,000 oz. gold at 5g/t x $1500 = $1410 million
p.15 Low Capex: $21 million
All-in sustaining cost (AISC) gold equivalent (AuEq) of just US$395/oz(1), placing it in the lowest quartile in terms of costs in the industry (PEA)
Leverage: 47.5
Leverage with capex: (29.7 + 21 = $50.7 million ) = 28 (I think this is one of the best free stock picks on my list.)

THIRD PAID STOCK PICK:
Market Cap, $44 million USD.
Resources of 930,000 oz. x $1500 gold = $1400 million
No Capex, a producer!
AISC (all in cash costs) $931 Produced 70k oz. gold in 2018. Potential earnings: $30 million. (Confirmed, as they paid down debt by $25 million, nearly debt free now.)
PE (price to earnings): 1.5 !!!!!
Leverage: 31.8
What explains the low price on this one? A pit wall collapse collapsed the share price, which never recovered, although the company did.
For the name of this stock send $62 to:
https://www.paypal.me/JasonHommel

http://seabridgegold.net/
https://finance.yahoo.com/quote/sa
$861 million MC
https://seabridgegold.net/resources.php
M & I: 61.5 million oz. gold at 0.5 g/t (LOW GRADES), but higher than Northern Dyanasty.
Inferred: 61.3 million oz. gold
Total gold: 122.8 million oz. gold x $1500 = $184,200 million
M & I: 278.5 million oz. silver
Inferred: 348 million oz. silver
Total silver: 626.5 million oz. silver x $17 = $10,650 million
Total gold and silver: $194,850 million
Leverage: 226
https://seabridgegold.net/pdf/corp_pres.pdf
p. 16: $5 billion Capex
Leverage with Capex and Market cap: ($5860 million) 33

https://www.rubiconminerals.com/Home/default.aspx
https://s21.q4cdn.com/960886365/files/doc_presentations/2019/20190801-Rubicon-August-2019-Corporate-presentation_FINAL.pdf
p. 6: 77.3 million shares outstanding
https://finance.yahoo.com/quote/RMX.TO
x $.85 share x .76 CDN/USD
=$45 million MC
Phoenix Gold Project in Red Lake, Ontario, Canada: $Cdn 770 million already spent.
Measured, Indicated & Inferred resources: 1.13 million oz. gold at 6.3g/t x $1500 = $1695 million
No capex or feasibility study yet.
Leverage: 37.7

https://www.guyanagoldstrike.com/
https://www.guyanagoldstrike.com/investors/share-structure
58.4 million shares outstanding
https://finance.yahoo.com/quote/gya.v
x $.14 share x .76 CDN/USD
=$6.2 million MC
https://www.guyanagoldstrike.com/images/presentation/2019/Guyana_Goldstrike_-Marudi_Gold_Project-_Jan_24_2019.pdf
Total indicated and inferred ounces
= 345,000 oz. gold 1.7 g/t x $1500/oz. gold = $517 million.
No capex or feasibility study yet.
Leverage: 83.4 (I think this is one of the best free stock picks on my list.)

4 replies on “Gold Stock Report #2 (20 stocks)”

  1. Hi Jason
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  2. David, thank you.

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