Gold Prices Heading To “Uncharted Territory”
FN Media Group Presents Oilprice.com Market Commentary
London – November 20, 2019 – It’s no secret that a small move up in gold prices. Often converts into a huge move in junior gold miners. For every 1% move in gold… a small gold miner can rise 20%… 40% or more. And right now, the smartest investors — insiders at TD, Merrill, Citi and more — are calling for gold to rise 33%. Mentioned in today’s commentary includes: Endeavour Silver (NYSE:EXK), Great Panther Mining (NYSE:GPR), Turquoise Hill Resources (NYSE:TRQ), Teck Resources (NYSE:TECK), Seabridge Gold Inc. (NYSE:SA).
Gold could surpass its all-time highs and shoot up over $2,000 per ounce. This could send gold miners into the stratosphere.
Back in 2016, gold prices jumped 26% in 6 months… and gold miner returns were stellar: Mid cap miners such as Endeavour Mining Corp gained 196% in 6 months, while its Ontario based competitor IAMGold gained 256% in that same timeframe. But the real winners were small-cap miners.
Argonaut Gold’s share price jumped 298% in 6 months, and its peer Great Panther Mining saw its share price even jump by a whopping 340% in no more than 4 months after it reported a 19% in gold production. And one company positioned to ride the coming gold rush than anyone else is African Gold Group Inc. (AGG.V, AGGFF).
AGG has a mine in one of the biggest mineral belts on earth, in a part of West Africa that has just become the capital of the global gold industry, where mining firms are spending hundreds of millions of dollars on new acquisitions. And AGG hopes to strike it rich in the next big gold boom.
Its mine already has resources of more than 2.2 million ounces.
A project that is planned to come on-line soon, with a total resource base of 2.2 million ounces of gold worth billions of dollars.
Here are five reasons to get excited about African Gold Group (AGG.V- AGGFF):
The Kobada Mine…$140 million
The Kobada Gold Project is in southern Mali—and investors should take note of the difference. Mali is Africa’s third-largest gold producer, and the southern belt near the borders with Cote d’Ivoire and Guinea is one of the most prolific gold belts in the world. Studies have suggested a current resource base of 2.2 million ounces.
The company thinks it can hit 50,000 ounces a year and build upwards to 100,000 ounces a year in a short time frame. The completion date of December 12 is in sight, with another feasibility study coming up in April 2020. At current prices, that would be $140 million in gross revenue a year… for a tiny small-cap firm.
Total costs look like they’ll come in under $50 million, with the gold close to the surface—the company has only had to dig 300 meters so far.
In Mali alone, there are at least twenty different mining companies are investing.
The area around African Gold Group (AGG.V- AGGFF) operation at Kobada is turning into gold’s newest hot-spot.
The Billion Dollar Gold Belt
Kobada is part of a massive belt running across a huge swath of West Africa. Mining here has been very lucrative, with Resolute and Barrick realizing big gains. It’s called the Birimian Greenstone Belt. And it’s already made a splash.
Take the Morila mine, in southern Mali, just east of Kobada. Operated by gold giant Barrick, the mine has been in operation since 2000. Or Tongon in Cote d’Ivoire, also run by Barrick, where 230,000 oz was dug up…worth $322 million. Or the Syama Mine, in Mali, operated by Resolute, which estimates it will produce 300,000 oz of gold per year. At current prices, that’s $420 million.
Kobada sits squarely in a belt of mines that have brought in big gains for investors. And West Africa is only now growing into a new global gold hub…it’s only now popping up on investors’ radar.
There are potentially hundreds of new assets that lie untapped, ready for exploitation by companies looking to make big gains, fast. And African Gold Group (AGG.V- AGGFF) could be even bigger than investors realize.
From Millions to Billions…Just Like That
There are real reasons to expect big things from AGG and the Kobada Mine. The company estimates the total haul for the Kobada property to be 2.2 million ounces, which at gold’s current prices could be worth as much as $3.1 billion in revenue. Despite recent news, including the decision by the Fed to cut interest rates, consolidation in the gold market means we can expect the $1400/oz rate to hold steady, or to trend upwards.
With China`s gold buying spree ramping up and increasing international trade tensions, industry experts expect the prices to go up to $2000. That means the estimated gold at the Kobada property could be soon worth more than $4 billion. And AGG (AGG.V, AGGFF) has a team that knows what it’s doing. They know how to execute on big projects.
A Firm Hand at the Wheel
The team at AGG is a superb group of industry professionals and financial whiz-kids who have spun iron ore into gold for decades. And this group is ready to do it again.
Working the heavy machinery is miner Danny Callow. Callow served as the head for Glencore’s African Copperdivision. For Glencore, he built numerous large-scale copper and cobalt projects, including a copper and cobalt operation in Africa from green fields to a 210,000-ton copper producer and the largest cobalt mine in the world. But the real news here is Stan Bharti, the company’s new CEO.
Just a few of his victories:
- Started and founded Desert Sun in 2002 at $0.40 a share sold 2006 $750 million or $7.50 a share
- Started and founded Consolidated Thompson 2004 at $0.25 a share sold in 2011 for $4.9 billion or $17.50 a share
- Started Avion Gold 2008 at $0.40 a share and sold in 2012 for $400 million or $0.88 a share
- Started Sulliden 2009 at $0.40 a share and sold in 2014 for merged value of $464 million or $ 1.47
Companies under Stan’s leadership have uncovered 20 million ounces of gold, more than 3 billion ounces of iron ore and 1.5 billion ounces of potash. He’s amassed more than $3 billion in investment capital for his companies and brought in billions to his shareholders.
He already pulled off one miracle. In the middle of the biggest financial crisis in history back in 2008, Bharti turned Avion around and sold it off for $500 million four years later. That’s a 20x growth rate. And now Bharti wants to repeat the feat with AGG.
“It feels like we are in 2003 again,” Bharti said, “at the cusp of a great run in gold and gold stocks.”
“I have always bought or acquired undervalued assets in emerging markets. This gives our shareholders the best potential for HUGE returns. African Gold Group (AGG.V- AGGFF) fits in that category very well.”
A New Gold Rush
It’s all happening again: the second big gold rush. Talk of a return to the gold standard is spiking…and gold prices are climbing. There’s a good chance interest rates could fall even further…into negative territory. And that will make gold companies irresistible for Wall Street.
Take Seabridge Gold Inc. (NYSE:SA), for example. It is an ambitious young company taking the industry by storm. It has a unique strategy of acquiring promising properties while precious metals prices are low, expanding through exploration, and then putting them up for grabs as prices head upward again. It’s had an up and down year so far, but it is starting to turn its plan into action.
Diversification is key and Teck Resources (NYSE:TECK) could be one of the best-diversified miners out there, with a broad portfolio of Copper, Zinc, Energy, Gold, Silver and Molybdenum assets. Its free cash flow and a lower volatility outlook for base metals in combination with a potential trade war breakthrough make it promising choice for investors.
Another diverse option is Turquoise Hill Resources (NYSE:TRQ). It mines a diversified set of metals/minerals including Coal, Gold, Copper, Molybdenum, Silver, Rhenium, Uranium, Lead and Zinc. One of the fortes of Turquoise hill is its good relationship with mining giant Rio Tinto.
While diversification is a major draw, sometimes a strict focus is helpful. And that’s what Great Panther Mining (NYSE:GPR) is doing. In the near-term, Great Panther will be on the integration of the Brazilian operations, the continued optimization of the Tucano gold mine, and advancing an exploration program to unlock the significant exploration potential of Tucano.” Now the company has managed to bump production and add to its reserves, the near-term catalyst needs to come from higher gold and silver prices.
2019 has been an up and down year for Endeavour Silver (NYSE:EXK). Its three mines in Mexico and a planned fourth mine in the Mexican state of Zacatecas are expected to see their output increase this year while the company has managed to keep AISC at reasonable levels last year, the question remains whether they can keep the costs low this year.
The VanEck Vectors Junior Gold Miners ETF, one of the most popular small-cap mining ETF’s, has gone up 50% in the last 2 months.
Mining expert and financial genius Stan Bharti, the new chief of AGG (AGG.V, AGGFF), thinks gold will reach $2000/oz. This little $30 million market cap company with its billion dollar mine in Mali could see a colossal surge of investor interest. And as big companies snap up small firms, the chance for a major pay-day grows—just look at what Bharti was able to accomplish last time, taking a small company and growing it 20x.
This is the new gold rush. And it pays to get in first.
By. Meredith Taylor
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