General Market Commentary
General Market Commentary
General Precious Metals
Gerardo Del Real: One For The History Books
The gold bull market is one that I believe will go down in the history books.
Those of us who speculate in the space and toughed out the bear market will look coherent again when the reality is — as a mentor of mine likes to point out — that in a bull market, a monkey could pick 10 stocks and do relatively well.
I’d like to think at the very least the monkey would be a bonobo, but I digress.
Monkey jokes aside, the most money will be made by those positioned early in companies ready to take full advantage of the roaring bull.
In baseball parlance, we are in the bottom of the first inning. That means there is low-hanging fruit ripe for the picking.
I write this weekly editorial in hopes that I can bring you ideas that further your due diligence process so you can take full advantage of this market and make money.
One of those ideas — one that will look obvious in hindsight — is Almaden Minerals.
Long-time Outsider Club readers will be familiar with Almaden. For both long-time readers and the newbies amongst you, an update is merited, given the current setup and potential for a significant move higher.
Almaden Minerals (TSX-V: AMM) (NYSE: AAU) is a company I first bought back in 2008.
The stock soared from the C$0.50 level to nearly $5 on an exciting gold-silver discovery in Mexico called Ixtaca.
All it's done since then is add over 4 million AuEq ounces across all categories (equal parts gold and silver), identified 2.5 million AuEq in reserves, bought a mint-condition mill (worth $70 million brand new) and published a feasibility study that boasts an NPV of over $600 million (US$466 million) using price assumptions of $1,425/oz. gold and $20/oz. silver.
Ixtaca’s projected average annual silver-equivalent production would make it one of the largest silver-rich precious metals mines in the Americas and bring necessary employment to an area that needs and wants it.
In addition to building a robust and profitable resource, Almaden has taught a master class on community relations (and how to handle fringe outsider NGOs with no actual interest in the community).
From employing locals to executing on a social investment plan to providing health care and education programs to locals, Almaden has set the standard on how exploration companies should operate in the communities they are working in.
For all its troubles, the stock trades near the same level it did nearly a decade ago before the discovery.
There’s a lot of runway between the C$108 million market cap and the $600 million-plus NPV described in the feasibility study.
In 2011, when I was consulting, I wrote a report on Almaden that identified it as an obvious takeout target. I was eight years early but I believe I’m close to being proven right and there are several important near-term catalysts, which is why I’m telling you all this.
The most urgent is an expected permitting decision that green-lights the project and forces potential suitors’ hands… finally.
That decision is anticipated to be announced no later than early November.
Projects with robust economics, long mine life, mint-condition mills, and excellent exploration upside in stable jurisdictions are few and far between.
Almaden has one.
To your wealth,
Gerardo Del Real