Amaroq, Greatland & Endeavour: gold is red hot
A few weeks ago, I wrote an article concerning the 'sexy mineral of the year' - where all companies involved in that metal enjoy a significant boost from the market. While helium is probably occupying the top spot at present (and will continue to remain attractive), the search is on for the next metal to grab the market's attention.
Is that metal going to be gold?
The context is that gold is hitting record highs - and as rates start to fall amid a likely US recession - could continue to hit fresh records. However, the junior gold stocks have not really moved to meet this new reality (they always take time to shift), but once in production, it can only be a matter of time.
To be clear, I believe that explorers will still benefit from higher pricing, but it's being able to see the clear difference between the $2,500+ gold price and the (in many cases) sub $1,000 AISC yielding a $1,500 profit for every single ounce, that is going to drag share prices significantly higher.
And if not - like with Centamin- someone clever will spot the valuation gap and make a takeover play.
Amaroq Minerals is aiming for first gold next quarter, has a Mineral resource upgrade on the way, and is sending out some excellent site media - including the Gravity Tower, which has just been installed at Nalunaq, and images of very visible 'bonanza' gold mineralisation within the West drive in 730 level in the Mountain Block.
Once the company really gets cracking on gold production, it is literally going to print money - and in terms of further upside, has the largest exploratory portfolio in Greenland. As it becomes ever more capable, AMRQ will be able to explore other assets at a much lower cost base and with greater technical skill than other operators in the region - add in the critical minerals exploration and there will be a huge resurgence over the next few months.
Greatland Gold has just released its new investor presentation; no surprises there and I covered what fully taking on Telfer and Havieron means for the company on the day it was announced. Hint - millions and millions millions of dollars.
Havieron is second only to Hemi in Australia's undeveloped gold resources, and production from Telfer will commence imminently. One factor to consider in terms of growth is that controlling Telfer means that consolidating Paterson may become easier than ever.
I would note on the share price; the retail offer was heavily oversubscribed - with preference given to existing holders. Those who could not get in at the 4.8p price may now choose to buy on market. On the other hand, GGP has historically slipped below placing price (but then, this is a very different kind of cash call to those of the past).
Endeavour has achieved commercial production at the BIOX expansion and Lafigué growth projects; both on 1 August 2024 and both on budget. This is a pivotal step to the transition to 'free cash flow generation.'
The BIOX Expansion operated with 94% plant availability at 80% of nameplate capacity, with average recoveries of above 72% during July and August. The Lafigué mine achieved commercial production only one month after the first gold pour, operating with 87% plant availability at 72% of nameplate capacity, with average recoveries of above 95% during August.
Endeavour remains on track to achieve its full-year production guidance with AISC near the top end of the guided range.
CEO Ian Cockerill enthused 'We are pleased to have achieved commercial production at both of our organic growth projects, fully de-risking construction and ramp-up activities. Both projects will drive stronger operating performance in the second half of the year...We will now transition the team to focus on our asset level optimisation initiatives and technical studies, ahead of our next growth phase, with the construction of the potential tier one Assafou project from 2026.'
With gold continuing to rise, all three stocks should make sizeable gains over the next 12 months; the cash generation and profit margins are so large that even AIM can't ignore it.
And if it does, enjoy the dividend yield!
- Charles Archer, 13/9/2024