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GoGold Resources (GGD) - Club Company Report Preview

October 19 2020, 18:32 GMT+01:00

GoGold Corporation (“GoGold”) (GGD:APH) (TSX:GGD) is a Canadian gold mining company lately expressly focused on exploring and developing mineral properties in Mexico.

NOTE: This is only a short excerpt, not the full 40 page report which can be found in the Club.

NOTE: We don't short stock or get paid to write hit pieces. If we are invested, we say so.

Introduction

GoGold Corporation (“GoGold”) (GGD:APH) (TSX:GGD) is a Canadian gold mining company lately expressly focused on exploring and developing mineral properties in Mexico.

In February 2010 the company began trading on the TSX Venture Exchange as a capital pool company and in July 2010 GoGold completed its Qualifying Transaction for trading on the TSX by acquiring the Rambler Property, a gold and copper project in Newfoundland and Labrador. After a limited drilling programme in 2011 yielded only sub economic gold grades no further activities have been undertaken on the asset and the value of the asset reduced to nil in 2013.

The Qualifying Transaction was followed by an acquisition in April 2011 of the San Diego property, but which proved unsuccessful and a write- down to a nominal value in 2016.

In May 2012 a business combination was concluded with Absolute Gold Holdings (“Absolute”), through an exchange of shares, giving the company effective control of the Parral Tailings Project. On the basis
of a prefeasibility study completed in February 2013 the project was
given the go-ahead and completed in 2014 with first gold poured in June and commercial production declared on 1 March 2015, defined as “the ability to maintain an average of 60% of designed tonnes stacked on the heap leach pad, 60% of designed Merrill Crowe throughput and 60% of expected metal recovery from the heap leach facility for
a period of 30 days”. This is a very liberal definition for commercial production, and the detail is worth re-reading again. Oh my – 60% of the designed tonnes/throughput, 60% of the estimated recovery... which is obviously 0.6 x 0.6... which is 0.36, or about one third of the planned amount of metal out of the back end, but with largely the same development and operating costs.

In February 2014 GoGold acquired 81.74% of Animas Resources Limited (“Animas”), owner of the Santa Gertrudis property in the Sonora State of Mexico, for a total consideration of C$12.96 million, of which C$5.5 million was settled in cash and the balance through the issue of 6.94 million shares. The project was a consolidation of 33 small deposits with declared total resources of more than 1.0 Moz at a grade of just above 1 g/t Au. The seven largest deposits contained 0.5 Moz at a grade of 0.66 g/t Au, but with metallurgical testwork pointing to difficult conditions for a number of these. Despite the less than marginal nature of the project, the company managed to do very well out of it finding a buyer in Agnico Eagle Mines Limited (“Agnico”). In September 2017 GoGold announced it had reach agreement with Agnico to sell its interest in the Santa Gertrudis gold project for US$80 million and a 2% net smelter return (“NSR”) royalty, subject to Agnico having the right to buy back half of this for US$7.5 million.

As a salient reminder of how difficult the resources sector can be, Agnico Eagle advanced the asset with a view to production but the asset did not get better the more that it was investigated. By 2020 Agnico Eagle had declared open pit resources of only 0.1 Moz at 0.64 g/t Au and underground mineral resources of 0.45 Moz at 4.58 g/t.

The Santa Gertrudis royalty was sold exactly one year later to Metalla Royalty and Streaming Limited (“Metalla”) for US$12 million, half of this amount settled in Metalla shares.

continues...

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