Portfolio Update: Last Two Weeks Action

New additions:

Superior Gold Inc (SGI)

• Newly formed company led by Chris Bradbrook
  • Ex CEO of New Gold and founder of Crocodile Gold
• Latest video presentation can be found HERE.
• Total land package: 644 Km2 in Western Australia (tier 1 jurisdiction)
• Flagship asset: The Plutonic Mine, acquired from Northern Star  last year.
  • Located in Australia
  • Over 5Moz of past production
  • Currently producing 80Toz (capacity for 150-200Toz already in place)
  • Aiming for 100Toz/year of production starting next year
  • CEO Expecting 30M of free cash flow next year.
  • ~2Moz Au (Reserves, M&I, inferred)
  • Recent exploration highlights:
    • 2.2m @ 64.0gpt
    • 3.8m @ 25.3gpt
    • 1.5m @ 41.5gpt
    • 4.6m @ 19.7gpt
• Noteworthy shareholders :
  • 19.2% Northern Star
  • 13.5% Sentry Investments
  • 8.7% Board and management
  • 8.7% Sprott
• Fully diluted market cap: US$89 M
• Cash and eqv.: ~US$30 M
• Enterprise Value: ~US$59 M
• Catalysts: Production ramp up (80Toz -> 100Toz, 100Toz -> 165Toz?), reserve expansion, maintaining performance and exploration success.
• Comment: EV of US$59 M for a soon (hopefully) to be 100Toz/year producer with expected FCF of $30 M next year. Cheap based on EV/Resource, EV/Production and especially EV/forecasted FCF. High risk / high reward play. If they are successful in extending the mine life by turning resources into reserves on top of reigning in costs, this could very well be a multi bagger. High beta play with company specific execution risks. Pretty unknown and underfollowed company IMHO (Which I like).
• NPV example:
  • 80Toz year 1, 100Toz year 2-8
  • 0.88Moz total production over 8 years
  • Gold price: $1300 (over all years)
  • AISC: US$1050 (Higher than quarter avg since takeover)
  • Discount rate: 7% (Bear in mind that most south american and african developers use 5%)
  • Accumulated free cash flow: US$165 M
  • NPV of free cash flow (7% Disc. Rate): US$135 M (vs. company EV of US$59 M)

Northern Empire Resources (NM)

Investment thesis can be read HERE.

Increased stakes in:

AbraPlata Resources Corp (ABRA)

• • Fully diluted market cap: US$15 M
  • Flagship project: Diablillos (Silver/Gold)
    • Resources:  ~2Moz AuEQ or ~155Moz AgEQ
    • Price/AgEQ Resource: 0.09 (way lower than any other name I follow)
  • Multiple Cu-Au-(Mo) porphery exploration properties/targets: Cerro Viejo, Cerro Amarillo, Samenta
  • Catalysts:
    • Exploration success (currently drilling)
    • PEA expected this fall
  • Noteworthy shareholders:
    • 19.9% SSR Mining
    • 12.3% Management
  • Comment: High risk / high reward optionality play. I am holding this for $25+ silver as with basically every other silver developer. Exploration success in any of their other high impact porphery targets could change the story in a heart beat.

Impact Silver Corp (IPT)

• Fully diluted market cap: US$25 M
• Cash: ~US$5.5 M (Q2)
• Enterprise value: ~US$19.5 M
• AgEQ production: 0.95Moz
• EV/AgEQ production: 20.5 (Compare with other producers HERE)
• Comment: Turbo charged silver beta with exploration and production upside down the road. High risk / high reward play.

Otis Gold Corp (OOO)

• Fully diluted market cap: US$42 M
• Comment: Expecting a lot from this company before years end. Insiders have been loading up all year.

Osprey Gold Development Ltd (OS)

• Fully diluted market cap: US$5 M
• Comment: One of the best R/R plays I know ATM. If this story even gets a whiff of success, I can easily see it outperform my other holdings. HIGH RISK. Currently waiting for drill assays.

Final note: Also added som shares in Novo Resources at CAD$5.80 today.