GLGDF - GoGold Resources: An Exciting Silver Story With Growth And Multiple Catalysts
2024-06-28 14:45:04 ET
Summary
- GoGold Resources is undervalued due to market overreaction to the outcome of the Mexican elections and the risk that open pit mining in the country might be banned.
- Los Ricos South can be built mainly as an underground operation.
- The company has a number of catalysts over the next 6 months, including completion of the DFS for Los Ricos South and awarding of the underground permit.
- With an EV of $250 million, production of 10 million silver-equivalent ounces at AISC below $10 per ounce in 24 months, and over 17 million ounces further ahead, GoGold is materially undervalued.
GoGold: why now
In this article, I would like to bring to the attention of my readers GoGold Resources (OTCQX: OTCQX:GLGDF ) (TSX:GGD:CA). I believe the company is materially undervalued and likely to rerate over the next six months. This undervaluation is the result of a market overreaction to the outcome of the recent elections in Mexico. The victory of the new left-wing President Claudia Sheinbaum has caused rumors that a law banning open pit mining (already rejected once under the previous administration) might be back on the table. Mining stocks in companies with operations in Mexico have sold off following the news. The reality is far more nuanced. First of all, it is the opinion of several practitioners that the new administration is more business-friendly than the previous one. Second, it remains unlikely that open pit mining will ever be banned completely, since 60% of mines in Mexico are open-pit and mining is a crucial part of the Mexican economy, representing 8.2% of its industrial GDP in 2023. Third, even if the process of permitting open-pit mines were to become more complex, GoGold would not be significantly affected....
GoGold Resources: An Exciting Silver Story, With Growth And Multiple Catalysts