Mining stocks are racking up blistering gains in 2016, as gold and silver prices explode higher. So I thought it would be a good time to do another Miner Spotlight, and call your attention to a mining stock that I believe could offer outsized returns during gold’s next major advance.
Gold Stock Bull ‘miner spotlights’ will periodically highlight mining companies with significant news such as high-grade drill results, the release of economic studies, takeover rumors, insider buying or other events. This will allow subscribers the opportunity to perform their own due diligence and potentially identify mining stocks at the start of a new major uptrend. We never accept compensation to write about mining stocks. To view the GSB portfolio and see which stocks we believe have the greatest upside potential, sign up for a 3-month trial of the Gold Stock Bull Premium Membership at just $95
One position that we are considering for the Gold Stock Bull portfolio is Integra Gold Corp (ICG or ICGQF). This small Canadian company is focused on production planning for its high-grade Lamaque South project in one of Canada’s premier gold producing districts, the “Valley of Gold,” Val-d’Or, Québec. They have been delivering impressive drill results lately, including yesterday’s news release: 80 grams per tonne gold (“g/t Au”) over 5.5 m, including including 437 g/t Au over 1.0 m! The Triangle deposit footprint continues to expand with step out drilling extending C structures both laterally and at depth, the company’s working capital is $33 million, 8 drill rigs currently active on the Lamaque Gold Project. Production is expected in late 2017.
JURISDICTION & INFRASTRUCTURE
Val-d’Or, Québec, consistently rated one of the top mining jurisdictions in the world, due to political stability, government support and quality infrastructure. Sigma-Lamaque Milling Facility (2,200 tpd mill and tailings facility) and access to the infrastructure and experienced labor force of the Val-d’Or mining community (pop. 35,000).
The company is well ahead of schedule with both federal and provincial level environmental permits in place and provincial exploration and mining permits either in place or expected in the near future.
77% Pre-tax IRR and C$184.3M Pre-tax NPV – 59% Post-tax IRR and C$113.5M Post-tax NPV, using US$1,175/oz gold price, 1.14 C$/US$ exchange rate and 5% discount rate. An updated PEA with expanded resource base should improve these numbers significantly.
Integral Gold has an anticipated production profile of +100,000 oz / year and a mill that can handle all that and more. Capex of C$62M and AISC of C$731/oz make it one of the lowest capex/opex development stage projects in the world.
RESOURCE CONTINUES TO GROW
Successful step-out drilling, primarily at the Triangle Zone has expanded their resource. The Triangle Zone is the Company’s highest grade and largest deposit. The deposit continues to grow at a rapid pace as indicated resources grew by 21% while inferred resources increased 400%. The total resource at Lamaque South now eclipses 2 million ounces at grades near 7 g/t gold. Integral has managed to DOUBLED the resource in roughly a year. This includes 1.16 million ounces of gold in indicated resources and 1.028 million ounces of gold in inferred resources.
STRONG PARTNER + ACQUISITION POTENTIAL
Integra Gold recently closed a C$14.6M strategic investment by Eldorado Gold Corporation, a multi-billion dollar gold producer with operations in Europe, Asia and South America. Integral Gold has to be a acquisition target for Eldorado Gold, as it would help to diversify their production out of riskier mining jurisdictions. Eldorado has a history of acquiring junior mining companies after early-stage investing.
The chart shows a bullish trend of higher highs and higher lows over the past year. The RSI is near overbought territory, but can peak well above the 70 level and has pulled back a bit in the past few days.
Integral plans a massive 100,000 metre drill campaign this year, so I wouldn’t be surprised to see their total resource increase another 50% to 100% during 2016. They will be releasing an updated PEA in 2016, which will include the expanded resource and should improve the economics substantially.
I believe the share price has the potential to double as the company continues to expand their resource and gold climbs back towards $1,500 per ounce. Analysts agree, with an average price target around $0.80.
Gold Stock Bull Premium Member were alerted to the potential of Integra Gold in late 2015 and it was recently added to our model portfolio. If you would like to be first to get all of our research into the resource markets, the monthly Contrarian Gold Report and our weekly trade alerts, click the button below to sign up for a 3-month trial at just $95.