Gogold, GGD.TO is a Canadian mining company with operations in Mexico. It is debt-free with approximately US$15 million cash or about CAD$19 million, see presentation, so the current Enterprise Value is only CAD$40 million or about US$30 million.
I don't include into the company's cash the 2% NSR that is valued for US$15 million, based on the offer from Agnico (AEM). However this 2% NSR is like cash and the gold mine will be in full production this year, so GGD's cash and cash equivalents is basically US$30 million, including the 2% NSR. But again, I put the 2% NSR aside and don't include it into these calculations.
GGD has been increasing its production at Parral mine and hit almost 400,000 silver eq. oz in Q1 2018, see the latest news, in line with the projections.
The recent optimizations do show great results and GGD expects production to hit 500,000 silver eq. oz in Q2 and 600,000 silver eq. oz in Q3, see presentation.
Additionally, GGD says that it will also produce and sell copper as a by-product this quarter.
Its operating costs will be significantly reduced this year after the sale of Santa Gertrudis and the elimination of debt. GGD has ZERO debt now, no interest payments anymore.
GGD made about US$2.5 million positive operating cash flow in Q1 and Q2 2017 when it produced and sold again about 400,000 silver eq. oz from Parral and Santa Gertrudis.
So it's safe to say that GGD will make US$2.5 million operating cash flow per quarter and more than US$10 million this year because the production at Parral will continue to rise in the next quarters, so GGD currently trades LESS THAN 3 TIMES its annual cash flow in 2018.
GGD's stockholder equity was US$87.8 million in September 2017, read the annual report.
GGD sold Santa Gertrudis gold mine and recorded a tremendous gain of US$54 million, read the company's news.
Don't forget that GGD bought the Santa Gertrudis mine for US$11 million just 3 years ago, so they sold it for US$80 million and proved to the naysayers that they can unlock tremendous value for the shareholders in just 3 years. It's the same management team who developed the biggest mine in Mexico in the past, Osisko mine and sold it with huge gains.
The insiders own 30% of GGD, so their interests are fully aligned with shareholders', this is not rocket science.
So thanks to this tremendous gain, GGD's Stockholder equity has been boosted and must surpass US$130 million in December 2017. We will see next week when Q1 is out.
Current market cap is just CAD$58 million or just US$46 million. So GGD's PBV is significantly less than half its book value!
This is ridiculously low valuation and GGD is a potential 5 bagger because this is a debt free company with ample cash
+ 2% NSR valued at US$15 million according to AEM's offer
+ very low CapEx this year after the completion of the recent optimizations at Parral.
+ silver and gold prices have limited downside and significant upside from the current levels
