Revival Gold on Cusp of Multimillion-Ounce Gold Resource & Mining Restart

Written by Nick Hodge
Posted February 3, 2020

While traveling in Vancouver for conferences recently, I had the chance to catch up with Revival Gold (TSX-V: RVG)(OTC: RVLGF) President & CEO Hugh Agro.

Revival is one of the three companies I featured in my gold talk at the Vancouver Resource Investment Conference. It has been one of the more successful companies in the space over the past few years, having raised money at sequentially higher prices as well as having executed a robust drill plan and grown its resource. 

It’s no secret that resource is about to grow again, with a resource update due out as soon as this week. I sat down with Hugh to talk about it, and why this new resource will allow the company to graduate to the next level of the market.

With the resources expected to come in at 2.5 million ounces of gold or better, Revival is quickly moving past being a retail story. I expect many institutions and strategic investors will be ready to write a check once the resource update is out, since the company will nearly be ready to start mining gold. I wanted to put the story in front of you before that. 

Enjoy.

—Nick 


Nick Hodge: I'm just back from the Vancouver Resource Investment Conference where I gave a talk about the remaining best seats for the last train out of Juniortown. That of course was relating to buying the best-of-breed junior stocks in this nascent bull market that we're in.

I want to be clear that we are in a gold bull market with the price at US$1,550+ an ounce or more in U.S. dollars, and at a record in many other currencies. One of the three stocks that I featured in that talk was Revival Gold.

It's a company I helped finance at 30 cents, on which I and the accredited investors who followed me doubled their money. Then had warrants at 45 cents, which went in the money and got exercised. Revival has done a great job at advancing their project over the past two years.

I'd view it as one of the more successful stories in the resource space. I have on the line the President and CEO of Revival Gold, Mr. Hugh Agro. Hugh, how's it going today? Hugh Agro

Hugh Agro: Nick, thanks for having me. Great to check up. 

Nick Hodge: Hugh, the tagline for your company on your company presentation and your hats and shirts is “Pursuing a Revival in Gold.” Can you talk to me about why you think there is a revival in gold and maybe what's driving that?

Hugh Agro: Since 2015 of course, your listeners know that the price of gold has been on the rise. There was underinvestment in the sector, and from a mining engineer's point of view, there's lots of demand out there for growth projects to feed the pipeline of over six dozen gold producers.

On top of that, of course, you've got all the liquidity that's been pumped into the system. From a macroeconomic point of view, there is a real primed up situation for gold to take off. From both a fundamental industry point of view and from a macroeconomic point of view, lots of signs for our being in the middle of a revival in the price of gold. It’s just begun.

Nick Hodge: Hugh, you mentioned that you were a mining engineer. Can you tell us where you spent your adolescence in the mining industry, and maybe some of your past successes?

Hugh Agro: Yeah, adolescence is right. We all learn from our mistakes in this business, because each project is a unique project. I've had the good fortune of having worked for some of the best companies and with some of the best people in the industry, including Placer Dome and at Kinross Gold where I was part of taking that company from a $1.7 billion market cap to a $17 billion cap in the last cycle.

I retired from the business, but came back to the industry to do Revival Gold. As you point out, Revival is really about a revival in the gold price which we see playing out today. It's also about a revival of a veteran gold team and an asset that's got brownfields attributes and infrastructure and capabilities and lots of potential for the drill bit.

Nick Hodge: That's precisely what I want to talk about next is the project. As you mentioned, it is a brownfield site. It was a past producer named Beartrack under Yamana, and of course, you also have Arnett. It being a past producer, it really gives you a head start on multiple fronts, whether it's a historical resource or some of the infrastructure. Can you talk about some of those benefits?

Hugh Agro: You always want to have more upside than downside in these junior situations. We've spent the last couple of years from zero resource building up to 2 million ounces in May, 2018. Next month we'll come out with our updated resource, which I think is going to be very impressive for our investors.

The bottom line is we've done a lot of groundwork. We've got a lot to work with at Beartrack-Arnett. It's the largest former producing gold mine in the state of Idaho. It's pure gold, which differentiates us from many other players.

It's a relatively higher grade too than a lot of our peers, so lots to work with. I think in the next resource update we're going to be graduating to the next level with our asset. This is something that's going to pop up on the radar screens of a lot of bigger companies and bigger institutional investors.

Nick Hodge: I couldn't agree more, Hugh. I think it's going to put you in a different league, and really take you to the next level and make it not a retail story anymore. 

It's no secret that I think this next resource update is going to add nearly a million ounces to the two million you already have, bringing it close to three million ounces. Might never have to see a brokerage again. And so you want to talk a little bit about that resource?

Hugh Agro: Well we have yet to put the resource out. I know you've got a pretty good eye on the project and have an expectation for where it's going to go. We put about 15,000 meters of new drilling into the project, which is about a 20% lift, taking us to about 90,000 meters of drilling into the project.

I think if we do anything better than about a 20% improvement in our resource update, that will be pretty spectacular and very efficient in terms of return on gold from dollars invested, which is an important metric. Yes, we're very excited about this resource coming out.

I think anything better than a two-and-a-half-million ounces, it will be pretty impressive.

Nick Hodge: I'm not the only one, Hugh, who has a close eye on the project. There's a number of analysts that are already eyeing this thing and have written it up, including Paradigm Capital, which has a C$2.45 Canadian price target on the stock while it trades around 60 cents.

Can we talk about your valuation? Of course, I think there's upside. That's why I financed the story. That's why I continue to cover the story and to be a shareholder. Can you talk about where you're being valued and how your peers are being valued?

Hugh Agro: Well, we've been talking a little bit about the bigger longer-term game plan, which is a 20,000-tonne-per-day mill operation producing 300,000 ounces a year of gold. That's an awfully tough project for a smaller company to tackle in one step.

What we've done is we've focused our efforts on both building out that bigger project and delivering on a potential restart of the ADR plant at Beartrack-Arnett and to produce gold from a leach operation. 

Something that your listeners are going to want to cue into pretty carefully when we put our resource update out is the component of it that's in the leach category and the prospect for Revival Gold to restart the ADR plant at Beartrack-Arnett, and start producing gold in the short term.

That's what's attracted the analysts to our story. The fact that as a junior, we don't have to contemplate a big capital project in the first step. We've got a way to move forward, start producing gold in the relative near-term, and then move forward to the bigger mill project afterwards.

I think that's what's garnered the interest from the street. As you say, we've got analysts with price targets out there of 2X to 3X where our stock is today.

Nick Hodge: Agree, and I think some of those reasons you mentioned about a restart are why I think the stock is due for a rerating, where it goes from trading somewhere around $10 or $13 an ounce, to more in line with its peer group, $40 or $45 an ounce.

That of course leads to a rerating to the upside for the stock. That is why I'm in it. Well done Hugh, congratulations on advancing the project so far. I look forward to the resource update and connecting with you after it's out.

Hugh Agro: Thank you, Nick.

Nick Hodge: Appreciate it.


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Nick Hodge

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Nick is the founder and president of the Outsider Club, and the investment director of the thousands-strong stock advisories, Early Advantage and Wall Street's Underground Profits. He also heads Nick’s Notebook, a private placement and alert service that has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world. For more on Nick, take a look at his editor's page.

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