Gold is continuing its surge upwards and on Monday 30th June hit a new high with futures trading at $1800, the highest level since 2011. I’ve touched upon gold in recent blogs and so far the story is playing out as I expected.
What will be interesting is to see if gold breaks the 2011 high around $1900. The reason it could is because it’s moving from a higher low and if it follows a similar path to that from 2009 then as some are predicting $2000+ gold could be on the cards.
Certainly global fiscal policy is fuelling the fire but also interestingly many of the larger gold mining companies haven’t been investing in new projects over the last 5-10 years and have bolstered their balance sheets in that time as a result
That could mean (and we are seeing more and more of it), further M&A on the cards as larger mining companies snap up assets to maintain their forward production, bolster reserves and protect their share price.
With that in mind I’ve added to the gold portfolio and I’m still looking at opportunities.
I am already holding both GRL and PUR (as mentioned in my last blog) as core gold positions as both are near-term producers with development and exploration upside, I see them as in the sweet-spot. I’m particularly fond of GRL and you can read more in my research note here
Landore Resources (LND)
In addition to the above, I’ve taken a medium stake in Landore Resources (LND) by way of the recent placing (£2.8m conditional placing). The placing will be used to run a a series of drilling programs through July to December 2020 including infill, depth and exploration drilling at their Junior Lake Bam gold project in Ontario, Canada.
What I like about Landore is the project location which adds some diversity to my gold portfolio being a particularly mining friendly and secure mining location and is one of the top ten mining jurisdictions in the world.
The Bam gold project has a JORC compliant resource of 1.015M oz with multi-million ounce potential.
The project as it stands already has a completed PEA (Feb 19) sporting a post tax NPV of $203m @ $1500 gold price with a post tax IRR of 39.1%
Despite the grades being relatively low within the JORC resource their is high grade potential in deeper target zones. The drilling campaigns will aim to up reserves and explore priority targets, clearly the exploration drilling will offer some excitement in the current market and proving up further resource could see the company hit the multi-million oz target.
Given the project location, the recent swathe of M&A we have seen and nearby operating mines, one cant rule out interest in Landore from potential suitors. Certainly the current resource, impressive PFS, extensive drilling programme to start and back drop of gold £15m cap post placing could offer some compelling near-term upside.
The company have signalled a strategic partner or corporate transaction could also be on the cards.
Research materials prepared based upon my own analysis and research. Accuracy cannot be guaranteed and research notes should not be taken as investment advice. Please always do your own research.
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