Producer

Future Upside Provides Excellent Entry Point For Fiore Gold

Pan Mine, Nevada

After a lengthy trading halt since June 12, Fiore Gold (F.V) started trading on October 2, having completed the business combination with GRP Minerals. This took quite a bit of time, as it was a fairly complex venture for both companies, with a lot of paperwork.  I view this deal as an accretive one, as a lot of tangible value through much more advanced assets was added, up to an estimated Net Asset Value of about C$120M in my view, and a lot of realistic growth potential. Apparently, not everybody had the same long term view for Fiore Gold as is needed in this case, the company now morphing into a long term growth production story instead of an exploration story, and a sell-off started immediately after opening of the markets:

The Fiore-GRP Deal: Giustra Builds Another Gold Producer

Pan Mine, Nevada

1. Introduction

In December 2016 I introduced Fiore Exploration, a new company backed by Frank Giustra, and it has been a relatively quiet 6 months. Fiore completed some drilling on the Pampas El Peñon project in Chile and an IP survey on the newly acquired Cerro Tostado.

But behind the scenes, things were in motion. Earlier this year, Fiore began exploring the idea of merging with GRP Minerals, a private company ramping up the PAN heap leach operation  in Nevada. GRP bought Pan and other Midway Gold assets for US$5.5M and spent another US$18 million on upgrading and restarting the operation. Midway had spent more than US$100 million constructing the Pan mine but in the end failed to execute. The demise of Midway Gold is a whole other story, one I will touch on later.

Leagold Mining: Woodyer & Giustra Are Building Endeavour Mining 2.0

 

Executive Summary:

  • After Neil Woodyer left Endeavour Mining as a CEO in 2016, he teamed up with mining titan Frank Giustra, to set up Leagold
  • They managed to buy the Los Filos gold mine from Goldcorp in Mexico for US$350M
  • After giving this a closer look, it seems a profitable acquisition for Leagold
  • Development potential provides significant upside in a few years
  • Management is aiming at aggressive growth in order to build the next mid tier producer

Kerrisdale Analysis On First Majestic: A Critical Review

Executive summary

  • Kerrisdale Capital Management, a short selling hedge fund run by Sahm Adrangi, wrote a short thesis on First Majestic
  • The author implied that this well-known silver producer was currently 70-80% overvalued, and also focused on the promotional background/nature of CEO Keith Neumeyer
  • He isn't the only big name promoting his company, and not the only big name betting on much higher metal prices
  • Although First Majestic actually has a high valuation based on the main ratios and multiples, 70-80% seems to be harsh and doesn't do justice to the company in my opinion
  • Surprisingly, after a few weeks since the report came out, it seems that instead of shorting, Kerrisdale actually called a bottoming process for First Majestic
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