ALERT - Get this Gold Stock on your buy list IMMEDIATELY
Gold Majors and analysts have it on their radar as a Takeout Target
Over the last 10 years, they have quietly captured 20% of the property in Nevada’s Carlin Trend - The 2nd biggest gold producing region in the WORLD.
They are RIGHT NEXT to the biggest producers and industry heavyweights...
The company CEO has said...
“Projects like this are becoming rarer and rarer.”
Small Cap URGENT ALERT:
5 Things You Need to Know RIGHT NOW!
Introducing The "Carlin King"
In 1961, a company named Newmont Mining discovered the first of many “Carlin-type” deposits at what would become known as the Carlin mine.
A "Carlin-type” gold deposit is one where the gold is finely distributed in the ore. So finely spread out, in fact, that you can’t see any with the naked eye.
That’s why prospectors and businessmen overlooked the “Carlin-type” deposits in Nevada for nearly a century – the gold they were looking for was invisible.
You won’t find any rocks with thick veins of gold or stumble upon any little gold nuggets or flakes to point you in the right direction.
Once modern-day mining heavyweight Newmont Mining (now Newmont Goldcorp) entered the scene, the area around the Carlin mine would forever become known as the Carlin Trend,
Despite the Carlin Trend being a figurative Valley of Giants, Gold Standard has been building up their sizable assets there, and now has control of 20% of the land in the Carlin Trend.
That puts them in 3rd place for land ownership in the region, behind only Barrick and Newmont. You know… the two biggest gold mining companies in the world.
This stock has some of the best drill hole intercepts in the Carlin Trend.
Their conservative PFS model used $1,400 gold as their base case and that has the potential to pay off BIG for their shareholders:
At $1,800 gold – they are in remarkable territory in terms of NPV, IRR, and Cash Flow.
Another major point to note are its $100 billion dollar neighbors.
GSV’s mammoth project is directly beside Barrick’s and Newmont’s operations in the area.
And these days, for gold mining majors (like Barrick and Newmont), the cost to acquire is significantly lower than the cost to develop their own greenfield projects.
Remember this acronym to help evaluate companies and look for the best:
In the end, our goal is to P.R.O.F.I.T.
For starters, as it is in any business, the right management team can make or break a stock:
Jonathan Awde - Co-Founder, President & CEO:
Jonathan has been with the company since it started as a private deal way back in 2006. His roots are in trading and sales at a brokerage firm, and he still has a Rolodex that many would die for.
He has many years of experience financing junior resource companies and has raised over $400 million in the industry.
Jonathan has the right know-how and connections to run the corporate development and asset strategies side of the business.
He is an uber hard worker who’s incredibly smart and savvy. He has a lot of skin in the game is very dedicated to maximizing shareholder value.
He’s exactly the guy you want at the helm as they transition from exploration to production or even a potential takeout.
Orion Resource Partners
Orion is a global investment management firm with approximately $6.2 billion USD in assets under management. They’re one of the world’s largest providers of alternative financing for mining companies looking to make the jump from explorer to an actual miner.
They focus on late-stage investments into companies who are well along the path to potential production, like Gold Standard.
They recently committed to a series of investments in order to purchase $22.5 million USD worth of shares of GSV. They also set up a silver streaming agreement for 100% of the silver production from the project.
But perhaps most importantly, Orion has agreed to provide a proposal for up to $200 million USD in financing for GSV to take their flagship project into production, so long as certain terms are met.
This is big for GSV.
And with the upfront capital expenditure for their mine being estimated at only $133 million USD (according to their Pre-Feasibility Study), they’ll have plenty of overhead to work with when they get there.
Albert Friedberg is a name that few know outside of an elite inner circle. His Friedberg Mercantile oversees an empire spanning mining, real estate, sports franchises, banking, and forestry.
He’s made a lot of money specifically targeting companies that give him exceptional leverage to the price of gold.
Back in the early 2000s, when gold was out of favor in the markets, he set out to find companies that would give him the most return relative to the gold price increase he knew was coming.
He owned 12.1 million shares of Arizona Star – 28% of the company’s float.
He invested early in Seabridge Gold with about 7 million shares owned across his various funds and trusts.
Albert’s track record speaks for itself in the resource sector.
In the past few years, when gold once again fell out of favor, he jumped right back into it with the same game plan.
And now, he’s doing it again in the world's second-largest gold-producing region – the legendary Carlin Trend in Nevada.
And the horse he’s picked as his winner in this race? Gold Standard Ventures (GSV).
Finally, it would be careless not to talk about the fact that Newmont itself owns 6% of GSV.
While that’s not a very large amount for a multibillion-dollar global juggernaut, it does indicate that they've dipped their toes into the GSV pool.
Now, let’s take a closer look at GSV’s assets to see what the hype is all about:
GSV holds two gold projects, both located on major trends in Nevada:
The Lewis project is located in the another of Nevada’s top gold belts. It’s got a smaller Inferred mineral resource of 248,300 ounces of gold equivalent.
Also, it's important to note that they are literally right next door to Newmont’s Phoenix Mine, so it has the potential of being a nice sweetener should a larger offer come in from one of the majors… It could go for a few million in a fire sale.
This is not the company’s focus and can be viewed as a cash box should they decide to sell the asset.
But the main asset that investors are clamoring over, however, is their flagship Railroad-Pinion Project on the famous Carlin Trend.
This project is directly bordered by Newmont Goldcorp and Barrick's property on three sides.
And have more than enough capital to scoop up a company like GSV easily, should they decide to pull the trigger.
One potential reason for them to acquire GSV is that Nevada Gold Mines’ (Newmont and Barrick’s massive Nevada JV) “Emigrant” pit, is no longer producing.
They still have the processing facilities, equipment, and permits in place... and it’s only 10 miles away.
Their modest Pre-Feasibility Study (PFS) projects 8 years of mine life producing an average of 156,000 ounces of gold a year. With recent gold prices, they’re digging up over $280 million a year.
But that could easily be extended with the addition of further drilling of the extra targets at Railroad-Pinion, which the company is already undertaking. As they believe that with a bit more exploration and development, they can significantly expand their reserves.
There are also plenty of oxide targets (easier to extract) for the company to potentially expand into in their mine development plan.
Currently, they total about 750k+ Inferred ounces of gold, and these extra targets could help extend Railroad-Pinion’s mine life for several more years.
Nevada, where Gold Standard’s flagship project Railroad-Pinion is located, is a fantastic mining jurisdiction.
It’s stable, with a favorable tax regime for miners, and the Carlin Trend is one of the most prolific gold mining belts in the world.
Over 90 million ounces of gold have been mined in the region in the last 55 years.
It’s home to mines like Barrick and Newmont’s Goldstrike mine, just a little to the northwest of the Carlin mine along that trend, which has produced over 40 million ounces of gold in its lifetime and is expected to stay in operation until 2034.
And GSV has the largest land package of anyone not named Barrick or Newmont within the Carlin gold trend.
Or as CEO Jonathan Awde has stated,
“If this land package was consolidated 25 years ago,
there would have been a hole in the ground.”
We’ve briefly talked about the big $ they stand to make – so now let’s dive a bit deeper into that Pre-Feasibility Study (PFS).
Below is an excerpt from their +500 page independent PFS report.
If you have a few extra hours, to read it's available to read online at sedar.com. But below is the most important part:
These are the kind of numbers that would make even legendary value investor Warren Buffett sit up and pay attention. Especially since he now knows the mining business after his Berkshire Hathaway recently invested over $500 million into Barrick Gold.
The PFS numbers are not imaginary and pulled out of thin air, based on empty speculation and a handful of drill results.
They're based off tens of thousands of kilometers of drilling and technical work and are backed by very thorough financial, engineering, and geological analysis. So, you know these numbers aren’t just for show.
That’s about as solid as you can get.
But right now, gold isn’t trading at $1,400 USD. It's been consolidating above $1,800 an ounce for the last few months.
And at that price... it blows their model right out of the water.
The all-in sustaining costs based on their conservative estimate is just over $700 an ounce.
This is actually quite low, thanks to the open-pit mine design and heap leach processing.
As the name suggests, open-pit mines are large holes dug directly into the ground. They’re cheap to run compared to the much more expensive underground mines.
Heap leach processing is a relatively new technology in the world of mining and not just for precious metals, but also copper, nickel, and uranium, among other metals.
The main reason why heap leaching is attractive is because if a mine site allows for heap leach processing, then things go a lot easier than when using other, more conventional processing methods.
Heap leach processing facilities also take much less time to build, reducing the amount of time it takes for a mine to go into production.
With the CapEx (Capital Expenditures) required for the mine being just $133 million USD, and low cash costs of just $582 per ounce, Railroad-Pinion is already very economic at $1,400 gold.
And thanks to the relatively low upfront costs, there's only a 3.3 year payback period at $1,400 gold, which is already quite good...
But right now, gold prices are much, much higher.
While no one can predict the future price of gold, many Big Players think this is only just the beginning.
Using a more up-to-date benchmark of $1,800 gold, our projections based on their PFS could drop the payback period to less than 1.7 years – which would be industry leading.
At $1,800 gold we’re also looking at a pre-tax NPV of over $590 million USD, making a takeout of GSV a complete no-brainer for any major’s shopping list given where it’s trading at now.
The Real Value
In general, markets won’t fully value a mining project at its full NPV.
To be conservative, you can apply a 40% discount to the after-tax NPV.
That’s because there’s still plenty of things that could go wrong in the mine’s development cycle, such as…
There’s risk involved with any implementation, so a discount of 40% is applied to account for said risks.
The chart below shows the prices with a hypothetical 40% discount.
From the chart above you’ll see that even with gold at $1,400 and with the 40% risk factor on top, the company would be trading for close to what it’s trading at now.
But right now, gold is much closer to $2,000 than it is to $1,400.
And at $1,800 gold, we’re instead looking at a NVP/share of $1.23 U.S. – and again, that’s after hitting the Railroad-Pinion project with a 40% discount.
Don’t forget – Gold Standard Ventures isn’t just some junior gold company with nothing but early-stage drill results and lottery tickets in its portfolio.
They’ve been at it for over 10 years advanced their flagship project along the development cycle and if there are no hiccups in their full feasibility study, they could potentially be producing in as little as 2-3 years.
Back in January 2017, Gold Standard peaked at a $640 million USD market cap.
Since then, the company has:
On top of that, the gold price is significantly higher – and yet, Gold Standard’s share price is only starting to catch up.
There’s a major gap between its current market valuation of ~$220 million USD and where the Net Present Value (NPV) of just its single flagship project alone with no additional drilling.
Gold Standard’s pre-feasibility study has Railroad-Pinion’s NPV at over $330 million USD at $1,400 gold.
They also have over $10M in cash as well as their smaller Lewis project.
The disconnect between their flagship project’s valuation and the valuation the markets have been giving the company has only widened.
Now that gold’s found support north of the $1,800 level, the company is even more attractive to investors… or one of the many billion-dollar producers in the region.
Potential Takeout Target?
With Barrick and Newmont both in the area, GSV would make for a very ripe apple to add to their Nevada Gold Mines orchard.
Again, the current gold price market makes a potential buyout of Gold Standard an interesting proposition for any major gold producer looking to make a name for themselves in the Carlin Trend.
Besides the valuation gap, other catalysts also include the currently ongoing engineering and technical studies which will help the company complete a full feasibility study by 2021.
Further development of the other targets at Railroad-Pinion to upgrade the Inferred resource there to Measured + Indicated will also help provide further upside to the stock.
A potential takeout is a very real possibility and investors who have been following this story since day 1 believe this will happen.
One cornerstone investor who’s already invested millions has stated:
“Producers are going to want exposure to the great basin
in Nevada, it is low risk.”
“They will be taken out in 12-18 months… this is a slam-dunk.”
As you can imagine, when you’ve been a mining exploration company for over 10 years with over $200 million spent to date on drilling and developing projects…
You’ve had to do a few rounds of financing along the way.
There are currently 300 million shares outstanding, which is acceptable given how much they’ve built out their assets over that timeline.
There’s also very little overhang in the form of options and warrants on their stock.
With all the financings over the years, the management has been diluted out slightly, but that is not stopping them from putting more skin in the game.
They have been scooping up shares in the open market whenever they get the chance.
In terms of cash resources, Gold Standard recently closed a massive raise just at the end of this August, and they’re currently sitting on $10 million USD cash with zero debt.
Their books are in fantastic shape and their engineering studies, step-out drilling, and other work will be well funded for some time to come.
Should they choose to go it alone and build their mine themselves, they’ve already secured terms to get access to a loan of up to US$200 million USD from one of their major strategic investors to do so.
That leaves GSV with a smaller % of retail shares available for grabs, which helps get more momentum behind the stock. Or, as one of their lead investors stated:
“When this thing moves, it’s going to move in big swings.”
Prior to the COVID-19 outbreak when markets briefly pulled back, the last time Gold Standard traded at these levels was almost five years ago in early 2016.
Since then the company has spent over $35 million USD on exploration and development on its flagship Railroad-Pinion project to advance it to where it is now.
They have done more or less done everything right in a declining gold price environment.
But now that gold’s rallied, the markets aren’t giving them any credit for it….Yet.
With gold now over $1,800 / ounce - Gold Standard Ventures is at a deep discount to what its Net Asset Value would suggest.
Even if we value Railroad-Pinion at only 60% of its NPV to account for the risks involved in actually building out the mine.
And while the markets may not be paying any attention to Gold Standard, the majors definitely are.
It’s become harder and harder for them to find major (1 million ounce plus) new gold deposits in the past decade.
And it’s increasingly both easier and cheaper for the large producers to simply buy out juniors to replace their dwindling gold reserves.
A company like Gold Standard with established reserves, plenty of development upside, and advanced permitting represents not only the most direct way for producers to maintain their production levels but also the most cost-efficient way.
That’s to say nothing of the fact that Gold Standard’s assets sit directly beside Barrick and Newmont’s operations in the Carlin and other prominent trends…
Where they’ve already got all the infrastructure and manpower they need.
Given where GSV is trading at right now, Gold Standard presents a very attractive potential takeover target.
And should be on the radar of every major with cash out there.
As a matter of fact, it’s certainly on Newmont’s radar, since they already own 6% of the company.
The longer gold stays at these price levels, the more likely it is that Gold Standard will potentially either get taken out, or see its valuation rise back up in line with its stronger mine economics. It’s a potential win-win opportunity for investors.
Remember, Gold Standard was being valued at more than $800 million back in early 2017 when gold was trading at just $1,300 an ounce.
And BEFORE they completed all the work for their pre-feasibility study.
With what almost all analysts, pundits & gurus are saying is the beginning of another gold bull market cycle on our hands...
Gold Standard Ventures is looking even more attractive on paper than it did in 2017.
As CEO Jonathan Awde stated,
“Projects like this are becoming rarer and rarer.”
He knows it and is fearful that someone could come in and buy them out before their full value is brought to the market…
The opportunity is now.
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