GoGold Resources (GGD) - Sequencing Revenue Flow to Build Scale

We recently caught up with Brad Langille, President and CEO of GoGold Resources, who talked us through their Los Ricos project and how their ‘middle ground’ of the North American and Australian models is growing the mine.

Company Overview

GoGold Resources is a Canadian-based mining company. Despite the name, GoGold is primarily focused on mining silver. They operate in Mexico and engage in exploration, development, and production of gold and silver. The mining projects owned by GoGold include the Parral project which is in commercial production. They have a self-funding exploration programme in Mexico in their Los Ricos District, which is one of the largest undeveloped resources still remaining in Mexico. They generate revenues from the sale of this gold and silver, as well as other by-products. They use the cash flow created to fund exploration at its Los Ricos project.

Brad believes we’re still in a long-term bull market in precious metals. However, the Los Ricos project is still delivering for GoGold. It is one of the largest drill programmes in Mexico, and it keeps generating good value; they are good consistent grades at 10,000m a month. GoGold has built 4 mines in Mexico but Los Ricos and Parral are generating some of the best cash flows Brad has seen in his 30 year career in the industry. GoGold also has institutional support and a strong balance sheet of $73M in the bank. Combined with the cash flow generation at Parral, it assists with funding their exploration. 

GGD’s Path Forth: Slide Presentation

GoGold has been in the Los Ricos District since March 2019.  The Los Ricos district is split into Los Ricos South and Los Ricos North, with the latter being the larger of the two. In Los Ricos South, GoGold has defined 63Moz of M&I in silver equivalent, and another 20Moz of inferred. This is the most advanced in the mine in the district at the moment. Over a year ago, the company announced to embark on the first 100,000m of drilling in Los Ricos North. This came about when GoGold saw it was the biggest part of the mineralized system in Mexico. This is based on the 100 year history of the district. The target is to reach 100,000m at the start of October and plan to keep going. Growth in this area is unlikely to slow. In Los Ricos South, GoGold is doing Pre-Feasibility engineering. They are pushing towards a mine to generate more cash flow and by the end of 2022, a construction decision will be made.

With the $73M in the bank, GoGold has the cash to pay for all exploration for Los Ricos North. The route is clear to obtain further financing to build Los Ricos South. This will create 2 mines in the company’s portfolio. GoGold is a mid-tier organisation, at the low end of the cost regime, with sustaining costs down to around $13. That is a good start. Brad believes Los Ricos North has the potential to be a real company maker. 

Construction Decision & Importance of Los Ricos

What makes GoGold unique is that they are already in production and generating cash flow. Using the Australian model point of view, they have built 4 mines in the past and have an operations team. Brad understands the philosophy of bringing in shareholder value by showing just how big the asset is, to entice a major who would be willing to acquire the company. However, GoGold is in the middle regarding the production orientated Australian model and drilling focused North American model. Brad emphasises they cannot control when, or if, another mining company will buy GoGold, and they do want to show how big the asset is as the belief is that it’s a company maker. They simply control what they have: doing good exploration, finding a lot of  oz, building good engineering, as well as mines when the time is right. What’s good about Los Ricos, from an institutional perspective, is that the retail investor can look at GoGold and view them as another peer in their business in Mexico.

Defensible Moves, Main Strategy & Juggling Two Projects

The duty of management of GoGold is to bring in the best return for their shareholders. Therefore their strategy is on building a good business and not focused on wanting to be bought out by a major mining corporation. As GoGold moves along, they will entertain good returns and opportunities for their shareholders.

Throughout Brad’s career, they have been backed be strong management and technical teams and  have done equity deals in excess of a billion. This includes a track record with big debt deals with Scotiabank at $110M and Bank of Montreal at $50M.  Therefore, as GoGold goes through proper engineering in Los Ricos South, Brad does not believe they will encounter any financing issues. Both projects can be done with the cash flows coming in from the Parral production. GoGold has a strong team and cash flow to undertake both projects. 

Extended Assets & Plans until Christmas

GoGold has some of the best business, government and community relationships in Mexico thanks to a 25 year history. Both Los Ricos North and South are within 18km apart. A site this large is like having 2 assets. A lot of the GoGold team are from the School of Ocampo with a project in Gammon Lake with a steep learning curve. The team has matured a lot over the last 20 years and Brad believes they are one of the best technical teams in Mexican business.

GoGold has Parral in production, with drilling in Mololoa and El Favor, two new zones. Los Ricos South in the build phase and Los Ricos North in the growth phase which is a great position for the company to be in. Between now and Christmas, GoGold is planning weekly press releases on production, cash-flow and drill results into the marketplace. 

Production Decisions for Los Ricos’ South

GoGold is targeting a construction decision at Los Ricos South in the latter part of 2022 and during this time will continue to drill and to grow resources at Los Ricos North in further exploration.

 To find out more, go to the GoGold Resources Website