Gold Mountain Mining (GMTN) - Unique Accelerated Plan for Production?

April 23 2021, 06:43 GMT+01:00

Gold Mountain Mining

  • Shares Outstanding: 59.7M
  • Share price C$1.80 (19.04.2021)
  • Market Cap: C$117M

Gold Mountain Mining is a BC based exploration and development company focused on the Elk Gold Project, a past-producing mine located approximately 57km from Merritt, BC. The claims and leases comprising the Elk Gold Project cover over 16,000ha offering both exploration upside and a clear path to near term production. The proposed multi-phase production plan will see a Phase 1,19,000oz production profile beginning in Q4 2021, which will fund the proposed ramp-up to 50,000oz by 2025. Concurrently with developing the mine, Gold Mountain Mining plans to continue drilling the nine known high grade mineralized zones, while continuing to explore other areas showing exciting potential.

We met for the first time with Kevin Smith, CEO of Gold Mountain Mining which is a new story for us. The company has a very aggressive plan ahead with lots of deliverables for 2021.

Company Overview 

Gold Mountain Mining is a new company with an aggressive game plan to drill and explore the property and also to get into near-term production and use the proceeds to expand the project into a larger production scenario and to establish a large Gold producer in British Columbia.  Gold Mountain Mining (GMTN) - Unique Accelerated Plan for Production?

Team Experience & Track Record 

Gold Mountain Mining is the first public company for CEO Kevin Smith but there is an experienced team with a strong track record in mining to help him. Tookie Angus is working on the structure and the build out of the business mergers and acquisitions. Daniel Kunz is in Idaho with the technical team and Dr. Quinton Hennigh is also on the advisory team. There is also a strong board with Keith Minty, Ronald Woo, Blake Steele and Howard Jones.

Progress So Far: What "Big Contracts" do They Have?

Gold Mountain has had some good news flow and made announcements on a new contract which is an ore purchase agreement with New Gold which has a 18,000t/day facility in Kamloops called New Afton.  This facility is 130km from the Gold Mountain project and this contract will allow the company to avoid the big capex and expense of building a mill at the start. They will follow the lean start-up model and once they have cash flow, it will be used to develop and build the company, rather than spending lots of money on expansion straight away. This will allow them to raise a little bit of capital to get it off the ground and then expand in a non-dilutive way.Gold Mountain Mining (GMTN) - Unique Accelerated Plan for Production?

G&A, Remuneration, & Management Shareholding

Management doesn't take any salaries at the moment as they are all equity driven and have made a commitment not to take any salaries until they get this project into cash flow. 

Business Model & Opportunity: Plan, Potential, & Project 

The main attraction of the Elk Gold project is that it has the opportunity to go into near-term production. Elk Gold is an asset with 127,000m of drilling and a 500,000oz high-grade deposit already in place and also has upside potential based on drilling in other areas. Gold Mountain is in-fill drilling and stepping out now to add ounces. The grades are good at just over 5g/t Gold and it is relatively low capex as well.

Gold Mountain Mining came out with a PEA in August for an open-pit project as they were confident that they are able to drive that into production. However, they have had some feedback that because the grades are so rich underground, there is also underground potential and the company should consider running a hybrid open-pit underground scenario. This would further increase the economics and allow them to chase that really high-grade that's underground.Gold Mountain Mining (GMTN) - Unique Accelerated Plan for Production?

Cash flow from the project will all be going straight into the ground and they have just finished the drilling in phase 1 and have released the first half of their assay results which were encouraging. Every hole on phase 1 hit mineralization on an 8,000m programme. As the asset has a lot of data it allows Gold Mountain to be efficient with the drill, and they are about to start another 8,000m drill programme. Gold Mountain is keen to show the market that they can drive the project up to 1Moz and beyond.

Gold Mountain has USD$10M and is planning to spend it on the drill programme and get into early production and get cash flowing. The PEA stated USD$43.5M of free cash flow in the first 3-years. If you operate under 75,000t in BC, you can defer the environmental assessment process. Gold Mountain has engaged First Nations and had inclusive conversations from the very beginning and has their support. They have 3 MOUs with some influential communities surrounding the project and also partnered up with Elman Lake, which is a majority-owned First Nation contractor which operates many mines in British Columbia. The company will be creating jobs for local communities which is something they set out to do early on in the process.Gold Mountain Mining (GMTN) - Unique Accelerated Plan for Production?

With the free cash flow, there is money to continue expanding, and to complete the environmental assessment which allows them to ramp up the project to 50,000oz/year production if they’re successful. The plan is to get into production and as soon as they're in production, to immediately start the environmental assessment process which they have set aside USD$2.5M to do so.

There is opportunity for upside and the cash flow will pay for that development. The company is hoping to launch a dividend in Q1/Q2 2022 to support their early shareholders and also be able to pay everybody equally.

Gold Mountain will continue to look at new projects which have similar near-term production potential and they are also looking at some blue sky options to bolt on. They realise that they have to grow to show additional scale if they want to attract larger institutional investors. Kevin Smith comes from a private equity background and he is keen  to see revenues, profits and dividend distributions, but most importantly he wants to continue showing the market growth and scale, and that the company is a serious Gold mining company.Gold Mountain Mining (GMTN) - Unique Accelerated Plan for Production?

Potential Issues & Barriers to Delivery

People are reacting positively to the Gold Mountain story and Smith is confident they will hit their deadlines. The company has had conversations with the provincial government and has provided all responses required on round 1 and 2 so hope to receive the permit in late Q2/21 and start construction in June 2021. In July and August they will be waste-rock mining and they plan to deliver material to New Afton's facility in October, and hit commercial production and first revenue in November. With the New Afton contract they will get paid 17 days after they deliver. They plan to do another raise once the permit comes in which they hope will be their final raise as they predict about USD$4-5M in revenue each month for the first 3-years once they reach steady state mining, in November/December. Let's hope they can. 

This is the first time we've heard the Gold Mountain story. The company has a lot of deliverables over the next few months and we look forward to following the story.

To find out more, go to Gold Mountain Mining's website.

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