Will This Be America's Biggest Gold Mine?
I need to tell you about a gold project.
One that could quickly become the largest in America.
Publicly, it contains 6-7 million ounces of gold. It also has nearly three million ounces of silver.
That alone already makes it the 8th largest gold reserve in the U.S.
And at 1.6 grams per tonne, it’s already the 4th highest-grade open-pit gold deposit.
But I believe there is much more there than is currently publicly known.
You see, the company went public in 2011.
Since then, it has completed a first resource assessment, a preliminary economic assessment, and a prefeasibility study.
Those studies already showed a gem of a gold mine, boasting the superlatives I’ve already mentioned.
They also showed the mine would produce gold on the cheap, with all-in sustaining costs of just US$526 per ounce
And at current gold prices, this project is looking at a US$832 million net present value (NPV) with a 19.3% internal rate of return (IRR).
Those are incredible numbers considering the company that owns it only trades with a US$85 million market cap.
As it stands, this could already be a ten bagger.
But there are a few unique circumstances afoot that could make it an even bigger win.
First off, since the prefeasibility study the company has done a significant amount of drilling to upgrade current resources from inferred to indicated, as well as to find new resources.
Those results will be included in an upcoming feasibility study. And rock that was once treated as waste will be converted to revenue-generating ore, thereby improving the already incredibly robust economics.
Not only that, but the project is incredibly leveraged to the price of gold.
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As I said, at current gold prices this project has a net present value of US$832 million.
But if gold prices rise to $1,500, that NPV jumps to US$1.13 billion — more than 13 times what the company is currently being valued.
And there are yet more reasons why these shares should be re-rated higher…
The project is already going through permitting.
You typically see projects trading at a discount early in the permitting process then that discount decreases as time goes forward and you get closer to permitting.
And I can say confidently that I think the project will be permitted for several reasons.
Besides gold and silver, this project also has a large resource of antimony — a critical flame retardant used in military and electric applications that the U.S. currently produces none of.
The government is entirely reliant on China for its antimony and would like that to change. As such, it’s already sent officials to this project to research the antimony there.
Plus, the site as it stands is in very bad environmental shape from previous mining there under former owners. There are metals leaching into a stream. There is a blocked salmon passage.
This company is going to remediate all this and the government won’t have to pay for it.
So because of the antimony and the environmental cleanup, I think this project is going to get the green light.
And so do several other sophisticated mining companies and investors.
Franco-Nevada has already purchased a 1.7% NSR. This was the earliest-stage royalty it's ever done on a project. It’s that good.
Teck came in and owns 9.9% of the company.
And billionaire John Paulson came in last year and backstopped a C$55 million financing. Paulson is famous for correctly predicting the housing crash and now is betting big on this project.
You should too.
And current levels present a prime entry point before the feasibility study and permits are delivered.
Call it like you see it,
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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