GROY - GoldMining Inc.: Another Junior Exploration Candidate Full Of 'Potentials'

2023-06-20 05:34:08 ET

Summary

• GoldMining Inc. has $4.90 million in debt and $5.68 million in cash in 1Q23. Shares outstanding diluted jumped to 166.88 million.
• GLDG owns 80% of its recently launched subsidiary U.S. GoldMining Inc.
• I recommend accumulating a small GLDG position between $0.92 and $0.88 with possible lower support at $0.85.

Introduction

The Vancouver, British Columbia-based GoldMining Inc. ( GLDG ) ( GOLD: CA ), a junior exploration company, announced its first-quarter results on April 12, 2023.

• On February 27, 2023, GoldMining announced that its subsidiary U.S. GoldMining Inc. ( USGO )," filed a registration statement on Form S-1 in connection with its initial public offering (the "IPO") of units (the "Units"). U.S. GoldMining is offering up to 2,000,000 Units under the IPO for US$10.00 per Unit. ". U.S. GoldMining Inc. is an exploration and development company focused on advancing the Whistler gold-copper project , located 170 km northwest of Anchorage, Alaska, USA.
• On April 24, 2023, GoldMining announced the closing of U.S. GoldMining's initial public offering of 2,000,000 units of U.S. GoldMining at an initial public offering price of US$10.00 per Unit.
• Also, New GoldMining Presentation was published on June 2023.

Note: I have been covering GLDG regularly since December 2020. This article updates my preceding article, published on January 25, 2023.

1 - GoldMining Inc. assets

It is time to refresh my preceding article on GoldMining, published on January 25, 2023. As of June 2023, The company owns four distinct entities:

• GoldMining: a 100% owned US company with a total M&I resource of 13 Au Moz from large gold and copper projects.
• Gold Royalty ( GROY ) with a 15% ownership.
• U.S. GoldMining Inc.( USGO ) with 80% ownership.
• NevGold (NAU: TSX-V)

The company's total gold mineral resources measured and indicated are 13.4 Moz and 9.9 Moz inferred.

GoldMining owns 15 projects (stages and pre-resources) in the Americas (Au and Cu with one uranium), including four in North America. A total of 9 projects are at the mineral resources stage.

1.1 - The U.S. GoldMining (80% ownership)

It is a separate public company focused primarily on advancing the Whistler gold-copper project in Alaska, USA .

The Whistler Project is fully permitted for exploration.

U.S. GoldMining Inc. quickly dropped from its high in May and is now trading at $11.65 per share.

1.2 - Gold Royalty Corp.

The company has 15% ownership in Gold Royalty Corp. ( GROY ). GLDG and GROY have dropped significantly recently and are down 16% and 34% , respectively, on a one-year basis.

Gold Royalty has an extensive portfolio of over 200 royalties with three main streams:

Gold Royalty is now providing cash flow to GLDG through its royalties and streams extensive portfolio. Gold Royalty pays a yearly dividend of $0.04 with a dividend yield of 2.21%.

2 - Investment Thesis

The investment thesis for GLDG and most of its subsidiaries is based largely on faith, and investing in such stocks is notoriously risky and unpredictable. I will call it the house of cards theory which is building an entire business model composed of many "potentials" that sound credible enough to attract investment but is far from certain success.

A thin line separates those junior exploration companies and a full-blown Ponzi scheme; it is often too late when we have enough credible elements to decide which is what.

One red flag we must worry about is the constant threat of dilution. It is a significant risk for shareholders. As I said earlier, on December 30, 2022, the company announced a new At-The-Market program ATM for up to $50 million worth of shares.

On the positive side, the new CEO, Alastair Still, has done an excellent job since he was appointed in 2Q21. He initiated the release of the Preliminary Economic Assessment or PEA on GLDG's La Mina Project in Antioquia, Colombia. He also focused on the PEAs for its Sao Jorge Project in Brazil and its primary Whistler Project in Alaska. Above all, it has started to break down the company into several subsidiaries that could be sold separately.

The most important success component is the price of gold and other metals. The gold price has recovered from its lows and is now trading over $1,950 on a more dovish action from the Fed. So far, the gold price in 2Q23 is about $1,995 per ounce, a record.

Hence, I suggest keeping a small long-term GLDG holding as a long bet, but it is critical to trade short-term LIFO over 80% of your position regularly.

This dual strategy can be generalized to any stock and is the primary strategy in my Gold and Oil investing group. The only variable element is the portion allocated to short-term trading, depending on the risk.

GoldMining - Financial Snapshot 1Q23 - The Raw Numbers

Note: All numbers are indicated in . Filings for the company are in C$.

Source: Company release

The company has $4.90 million in debt and $5.68 million in cash in 1Q23. Shares Outstanding diluted jumped to 166.88 million.

For the three-month ended February 28, 2023, the Company incurred a total operating loss of C$3.734 million, compared to C$3.321 million on February 29, 2022. The increase in operating loss was due to general and administrative expenses, professional fees, and share-based compensation.

ATM program:

On December 30, 2022, the Company entered into a new ATM Program which replaces the previous ATM program which was set to expire on January 1, 2023 in accordance with its terms. Pursuant to the new ATM Program, the Company may distribute up to US$50 million (or the equivalent in Canadian dollars) of ATM Shares.

During the three months ended February 28, 2023, the Company issued 4,139,920 common shares under the ATM Program for gross proceeds of CAN$7.633 million, with aggregate commissions paid to agents of $191K.

Technical Analysis and Commentary

GLDG forms a descending channel pattern with resistance at $1.04 and support at $0.90. RSI is 30 and has entered an oversold territory that could signal a buying opportunity.

I suggest selling between $1.02 to $1.10 with potential higher support at $1.25 and accumulating a small position between $0.92 and $0.88 with possible lower support at $0.85. A warning, the stock is subject to wild swings once in a while.

Watch the gold price like a hawk.

Warning: The TA chart must be updated frequently to be relevant. It is what I am doing in my stock tracker. The chart above has a possible validity of about a week. Remember, the TA chart is a tool only to help you adopt the right strategy. It is not a way to foresee the future. No one and nothing can.

For further details see: