|
"Buy low, sell high"
distills business and investing to its essence.
With gold poised for a bull market, the first and
biggest winners are those with established National
Instrument 43-101 gold resources with leverage to higher
prices.
AND GoldMining Inc. is the best stock to multiply your
returns on the yellow metal.
We know that much higher gold prices are
inevitable... And it's very likely that the next move
will usher in a bull market similar to the one we saw
from 2004 until 2011 when gold prices exceeded
US$1,800oz. When that happens, Companies that can
accumulate assets on the cheap during down markets stand
the best chance of outperforming their peers when bull
markets re-emerge.
What makes GoldMining a
compelling play on gold?
GoldMining Inc. (GOLD.TSX;
GLDLF.OTCQX) amassed 9.5 million ounces of gold
resources in the measured and indicated categories along
with an additional 11.7 million ounces in the inferred
category with numerous advanced exploration projects
across the Americas in 5 safe jurisdictions.
The Company has executed to perfection and it did so
by leveraging the down market for gold to buy assets at
fire sale prices - in some cases at less than US$1/oz.
That's the story.
How the right gold equities can offer investors that
leverage on the yellow metal.
When gold prices rose in 2016 (about 25 percent from
$1,050 to $1,370), companies with established assets did
much better. But since 2011, the yellow metal has
largely traded down to sideways, negatively impacting
numerous junior exploration companies. The downturn
presented opportunities for
GoldMining Inc. to
scoop up companies and projects extremely inexpensively
all around the Americas in places like Alaska, Brazil,
Colombia, Peru and Canada.
The following chart - showing the peak market caps of
the companies that
GoldMining has brought
into its portfolio - tells a compelling story.
Value and Optionality on a per share basis
If you look at the combined peak market cap of all the
companies that
GOLD acquired from
2012-17, you will observe that the Company paid C$80
million to acquire projects that were valued at C$822
million at their peak. Note that these transactions were
nearly all stock deals, consisting of shares with no or
very minor cash payments. The company's current market
cap hovers around C$120 million.
GOLD definitely made acquisitions well
below all-time peak market caps, historic values, and
replacement value.
A quick calculation shows
that its all-in global gold equivalent resources totals
12.4 Moz in the measured and indicated categories and an
additional 14.2 Moz of inferred (when factoring in 2
billion pounds of copper) are currently valued at less
than US$4 per ounce of gold in the ground! And that
is a compelling valuation compared to its mid-tier
junior exploration peers.
You read that right. If the next bull market brings the
projects in GoldMining's portfolio back to their peak
value, it would deliver nearly a seven-fold increase in
the company's valuation versus the current stock price
of ~C$0.90.
Large Diversified Portfolio of High-value Projects in
Politically-Stable Countries
GoldMining boasts 9.5
million ounces of gold in the measured and indicated
categories along with 11.7 million ounces in the
inferred category with 8 projects spread across the
Americas in safe mining jurisdictions: Alaska, Canada,
Brazil, Colombia and Peru.
That's key, because the market
often applies a political discount to projects and
companies operating in countries without strong
protections for foreign investment.
Plus,
GoldMining has some
optionality on uranium, thanks to a 75% interest it
holds in the Rea property in the Athabasca Basin. (Note:
uranium prices just hit a 52 week high on improving
fundamentals - this asset is becoming more valuable by
the day!)
Best Optionality for High-leverage Gold Plays.
With exploration costs now averaging $174 per ounce
of gold discovered, GOLD has chosen a different tact.
In the past 6 years, the gold sector has
been beaten up leading to underinvestment by the majors
on exploration. Major producers are faced with declining
reserves and lack of long-term production capability,
which had led to increased mergers and acquistions in
the sector in the past 3 months (i.e. Barrick and
Randgold, Newmont and Goldcorp). Companies with a single
asset are faced with high operating costs and
geopolitical and operations risk to preserve thier
project and cash.
GoldMining has been
able to identify exceptional opportunities, cut good
deals and do it consistently, and do it patiently at the
bottom of the cycle.
Since the company's IPO in 2011,
GoldMining has taken
advantage of the prolonged bear market to acquire
resources in the ground for less than $10 an ounce, way
below the unit discovery cost today. Keeping G&A cost
per ounce at bare minimum preserves the longevity of
that option value on a massive gold resource on a per
share basis. For an investor, it's like holding this
multi-year optionality in your hand for the long term.
Distressed companies or resource project assets acquired
by
GoldMining had already
spent hundreds of millions in completing a large amount
of work on these sizable gold-copper advanced
exploration-stage projects. This includes completed
drill programs, NI 43-101 technical reports, and even
pre-economic assesments (PEAs) that are attractive to
mid-size and large gold companies who are searching to
add ounces to their portfolios now.
Assuming these projects are ultimately sold-off for
significant cash or spun-out individually into other
companies when the inevitable bull market for
commodities comes around, future transactions will
result in significant capital gains to GOLD
shareholders.
Is NOW the time to get positioned in GoldMining Inc?
GoldMining was publicly trading during the 2016 precious
metals rally when
GOLD was the #1 top
performing gold stock on the Toronto Venture Exchange.
During this time frame,
GOLD stock zoomed from
C$0.38 in January 2016 to C$3.35 in September for a
return of nearly 9x!
The record shows the
GoldMining had an EV/oz
of US$20/oz. in June of 2016 versus todays EV/oz of
US$4/oz even though GoldMining has increased its global
resource by 108% during this time.
That's 5 times today's level of US$4/oz. - and an
indication that a resurgence of gold to just its 2016
prices could send GoldMining's share price soaring
towards new all-time highs!
GOLD stock purchased in mid-December 2016 at C$1.50 and
sold five trading days later at C$2.25 returned 50%.
GOLD stock purchased in early December 2017 at C$1.25
and sold in mid-January 2018 for C$1.50 returned 20%.
GoldMining Inc is in a financially strong position
with over C$9 million in cash and no debt.
With eight projects in five different countries across
the Americas today, GoldMining controls one of the
world's largest diversified gold resource portfolios of
any publicly traded junior gold company.
The correction in precious metals prices offers
interesting options if you continue to believe in the
gold bull market.
Gold was at the key crossroads in late 2018, and
finally moved above US$1,300 in January with the U.S.
Federal Reserve finally pausing on further interest rate
hikes. And if gold renews its assault on the US$2,000
mark, the sky is literally the limit for this
well-positioned gold company.
Those who invest in
GoldMining today -
before gold turns the corner - could be very glad they
did.
CLICK HERE
Learn More about GoldMining Inc. |
