GoGold Resources (GGD) - High-Grade Results Continue to Excite Market

GoGold Resources is a Canadian-based mining company. It engages in the business of exploration and development of gold and silver primarily in Mexico.

The mining project owned by GoGold resources also includes the Parral mine project which is a commercial tailings recovery project. Parral generated $6.3M of free cashflow in Q1/21 from the sale of gold, silver, and the other by-products and uses the cashflow to fund exploration at its Los Ricos project.

We had an opportunity to speak with Bradley Langille, President and CEO of GoGold Resources, about the company’s recent and current activities.

Company Overview

GoGold Resources is a Canadian-based silver and gold producer with active projects in Mexico. The company is expert bring mines into production. In the process, GoGold strategically builds silver and gold reserves, forms long-term financial alliances, and creates thousands of jobs. The company has over 280,000,000 fully diluted shares outstanding and is listed on the Toronto Stock Exchange under the symbol GGD.

Management And Direction

The company’s managers are veterans of successful mine development and operations in Mexico. In addition to Langille, the team is composed of Dana Hartfield, CFO; Anis Nehme, COO; John Turner, Chairman of the Board, Phillip Gaunce, Director; George Waye, Director; and Terrance Cooper, Director.         

Company Projects

GoGold Resources has 2 major assets in Mexico:

• The Los Ricos Property, acquired in 2019 and located in Jalisco State, Mexico
• The Parral Tailings Property, a heap-leach facility in Parral, Chihuahua, Mexico

Los Ricos is a comprised of 42 concessions covering some 22,000ha and is home to several historic mines. It is split into 2 divisions: Los Ricos North and Los Ricos South. A PEA was announced for the Los Ricos South asset January 2021. A 100,000m drilling program is underway at Los Ricos North with some spectacular and consistent results.

Historic mine tailings are being processed at the Parral operation. GoGold is currently producing salable silver, gold, and copper at a low cost. Production has increased each year that the Parral tailings facility has been in operation.

GoGold generated some USD$6.3M of free cash flow form its operations in Mexico for the first quarter of 2021.

CEO Overview

Langille likes to think of his company as a junior miner about to become mid-tier. He pointed out that the company has a solid balance sheet, good free cash flow, and over USD$73M in its bank account. The operating mine at Parral generates the cash and has at least 8 years of reserves left. They are focused on developing the Los Ricos properties, which he said “is fast becoming one of the really important silver districts in the business”.

Raising Big Dollars

GoGold has raised some significant cash of late. As announced in April 2021, a group of underwriters, including Sprott Capital, Echelon Wealth Partners, and others, have purchased shares in GoGold, bringing in proceeds of approximately $25M.

We asked Langille why they need this money now, especially considering that they had raised quite a bit of money earlier in 2020. He responded that, yes, right now he doesn’t need any additional money to carry out operations. But the issue, he indicted, is future CAPEX spending. The firm’s work at Los Ricos over the last 2 years has resulted in the booking of 63Moz silver (measured and indicated), as well as an additional 20Moz of inferred silver resource. That will require $125M in CAPEX to develop.

All the good news has caused the company’s share price to rise from well under a dollar to about $2.50 since we first spoke to them in mid 2019. Shareholders coming in now are probably looking for $3.50 to $4 in share value. In the mean time, GoGold is full steam ahead: They have 8 rigs turning at los Ricos North and expect to have another rig turning soon. Given the ounces they’ve discovered so far, what they intend to carry out and what shareholders are demanding, the raising of cash on an incremental basis makes sense, he said.

He broadened the discussion out a bit by saying that the company believes that they are about to crack open a major silver district in Mexico: “Simply the best thing I’ve had in my career”, he told us. They are on track to potentially build 4 mines. Assuming that nobody has bought them out they’ll be in need of quite a bit of funding to develop the their properties on their own.

Shareholder Make-up

Indeed, the path to developing into a mid-tier company has implications for GoGold’s shareholder base. Langille is looking for a good balance between institutional and retail shareholders. Some highly supportive institutional buyers got in at about $1.50, he told us.

He reiterated that the company intends to grow into mid-tier size for the benefit of the shareholders. Along the way, however, if a major comes along they will entertain a deal. It’s all about maximizing shareholder value and Langille is the second-largest company shareholder, he reminded us.

Mine-Building Process

We then turned to exactly how the company intends to build mines at GoGold. Langille responded by saying that even if you put together great drill results, investors are still looking for the plan and process of mine building.

At Los Ricos South, they intend to take things past the PEA stage by conducting more detailed metallurgical analyses, and then moving forward toward a feasibility study. In addition, they are looking to find nearby, satellite ounces with targets such as Jamicah, only 2km away form the proposed open pit.

At Los Ricos North, specific mine-building plans will be forthcoming once a resource announcement is released. They’ve had some positive discovery surprises there, particularly at the El Favor, El Orito, Casados, La Trini, and El Nayar sites. First resource estimate is coming out in September 2021. The CEO “expects a significant number” of ounces to be released then, which could be 250Moz to 300Moz of silver when all is said or done.

Timing Growth Correctly

We then asked the CEO about the size of his company relative to business optionality, and whether choices on potential suitors would be lost if the company becomes too big too fast. He responded that yes, that's a concern to him, but not a really big one. Given the real potential of the district, the current $700M market cap is not too big at all in his mind. As positive news comes in, the value of the firm could move well past that, he said. He did concede, however, that if GoGold balloons to a $1.5Bn company, then the list of potential acquirers becomes shorter.

He then returned to the company-building theme and emphasized that “We’re just getting started here”, building the balance sheet and de-risking the deposits. He reminded us to keep September 2021 in mind for Los Ricos North, and “that’s just the beginning”.

Closing Comments

Langille closed out the conversation with a summary on the growth standards for GoGold. “We’re totally committed to building value here, and I think we’re using good, prudent, sound experience and good logic. We want new shareholders to come into the company and we want them to make money”, he said.

To find out more, got to the GoGold Resources Website