This is the lead-in to the latest pitch from Gerardo Del Real for his Junior Resource Monthly ($199/yr):
“From the Man Behind the 10,800% Win on Patriot Battery Metals…
“Tiny $4 stock owns the biggest gold mine in the U.S. and NOBODY knows about it — but that’s all about to change as an imminent announcement reveals it to the world. Using history as a guide, 100-fold gains could be on the table.”
Del Real fleshes out the pitch a little bit here:
“I have identified an urgent opportunity that I believe has similar potential to Patriot Battery Metals…
“Only it’s not in lithium, copper, or uranium.
“It’s a massive gold discovery – one of the largest, highest-grade, and lowest-cost gold projects in the US – and nobody is watching…
“Yet later this year, this discovery will achieve a milestone over seven years in the making…
“All while the next stage of the gold supercycle pushes the price of the yellow metal to new highs.
“The convergence is promising to generate explosive gold gains not seen in two decades…
“The kind of gains like readers of mine saw with Patriot Battery Metals…”
And he spitballs some numbers…
“In the deep wilderness of Idaho, hours from any airport, is a gold discovery that’s unparalleled anywhere else in America….
“Officially there are 6 million ounces of gold, but unofficially…
“According to my own direct exploration…
“There are likely 20 MILLION ounces of gold in total at the project…”
Geez, so he actually got in and did his own “direct exploration?” Seems a bit odd, but mining newsletter guys love to show photos of themselves at mine sites, wearing hard hats and getting their “boots on the ground” — as if being there in person means you can make a better judgement about how many grams per tonne of gold is under the ground in each spot.
But anyway, a few more hints from the ad:
“… this project is 100% owned by a tiny miner that almost nobody can name…
“And it trades for just $4 a share.
“By December — less than four months from now — I believe that will change dramatically and this company and its mine will be put on the map, hailed by the world’s top gold mining experts….”
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And he tells us what math he uses to justify his 10,000% prediction:
“When Barrick bought out Randgold a few years ago it paid $240 per ounce.
“That would make this project worth $4.8 billion, and shares of the company that own it worth over $70 — nearly 2,000% higher than they currently trade.
“But gold is trading much higher now than when Barrick paid $240 per ounce for Randgold.
“On top of that, this company has deep-pocketed financers, like billionaire investor John Paulson….
“They will have among the lowest-cost operating gold mines in America…
“With each ounce costing only $438 to mine, all-in.
“At today’s gold price, that makes each ounce worth around $1,500 in profit on paper.
“That means we can value the 20 million ounces I think the company has at $30 billion.
“At that price, we’re not talking about 2,000% upside…
“We’re talking about just over 12,600% upside.”
That’s quite a daisy chain of optimistic calculations for a property that’s presumably still in the “exploration” phase — gold that’s probably underground is, naturally, worth a LOT less than gold that is in the process of being mined and refined with some predictability, which is what Barrick mostly bought when it acquired Randgold five years ago and became the most dominant gold miner in the world, owner of almost a dozen of the world’s biggest mines.
So… what’s the “December” part? What makes this an urgent story? (Aside from their need to recruit new subscribers, of course, that’s always urgent.) Seems to be all about permitting…
“…this gold find has been around for years….
“But as of December, a major hurdle will finally be cleared….
“That hurdle is the US Forest Service decision to permit the project.
“And I believe that the decision is already in the bag for many reasons.
“But the biggest is this: They’ve landed tens of millions worth of government contracts….
“Because this site not only contains gold but another vital resource….”
That other resource is antimony, which Del Real says is essential to military applications, and isn’t otherwise mined in the US. And he thinks the government is signaling the likely approval of the project…
“The feds already tipped their hand by awarding this company $25 million as part of the Defense Production Act.
The company also plans some major mine reclamation work, helping to clean up the previous mines that polluted the site….
“They’re preparing to bring it back online in a way that keeps Idaho’s environment unspoiled and beautiful.
“Last October, the US Forest Service highlighted the project’s benefits…
“They noted the company’s improvements of the water quality and river habitat.
“They called the company’s plan a ‘preferred alternative’ to leaving the project as is.
“In other words, the government is calling this potential mine a NET BENEFIT to the environment.”
And he comes back to that John Paulson connection…
“He owns 24 million shares and just keeps adding.
“His stake in the company is now worth $110 million…
“That’s more than he invested in his famous short on the housing market in 2008, which was memorialized in books like ‘The Greatest Trade Ever.'”
So naturally, Del Real calls his special report, “The Greatest Gold Trade Ever: America’s Next 100-Bagger Gold Discovery.” What’s it all about?
Well, this might ring a bell for those of you who’ve been aboard the good ship Gumshoe for more than a few years — this is yet another tease about the Stibnite Gold Project in Idaho, which is owned by a junior explorer called Perpetua Resources (PPTA). If the whole story sounds a bit familiar but the name doesn’t ring a bell, that’s probably because they were called Midas Gold — and Gerardo Del Real and his colleague, Nick Hodge, have been touting Midas and Perpetua because of this Stibnite Project for about 5-1/2 years. So yes, he does honestly come by the claim that he’s been following the stock for a long time… though buying it when these folks started to claim that permitting was all but guaranteed and the stock was likely to go on a 10,000% run (the letter signed by Hodge back in January of 2018 used very similar language to this latest ad), would not yet have gotten you to “generational wealth.” Here’s how the stock has looked since we first covered Hodge’s version of the ad on January 16, 2018 — for some context, that’s PPTA in purple, the actual gold price in blue, the average big mining stock (GDX ETF) in green, and the S&P 500 in orange:
So… what’s going on with the project now? Back in 2018, the expectation was that they’d keep finding more gold and the permits would be approved within a year or two… and they have increased the gold resources that they’ve identified and made some progress on the permitting, but it’s still a tiny $200 million company and it has also had to roughly triple their sthare count as they’ve issued new stock to keep funding their permitting and exploration work (the sunk costs of the project are now at about $575 million if you go by their “negative retained earnings” line on the balance sheet).
And the basic conclusions of the 2020 feasibility study still certainly look good — they expect to be a very low cost mine (less than $500/oz all-in sustaining costs for the first four years, a bit higher after that), with very high production (463,000 ounces a year for four years, then stepping down to ~300oz), and it is certainly possible that the mine will end up being meaningfully better than their current estimates — it’s true that miners are not incentivized to maximize the size of the mine before they begin to build, they’re only incentivized to confirm that it’s big enough to be worth building, the general strategy followed by most little miners is that once they’ve proven that the mine is viable enough to justify financing construction, they can do more drilling to extend the reserves later on, once they actually have positive cash flow. It’s pretty rare to see a new mine built that has more than 10-12 years of reserves, but the best of them keep extending their reserves and can operate for decades.
And yes, the Defense Production Act was used to award $24.8 million to the Stibnite project to advance their construction readiness and permitting, mostly to fund work while they permitting is still going on, in hopes that it will speed up construction a bit once they do receive approval. I would hesitate to be certain that the different arms of the government are talking with each other on this point, I wouldn’t be 100% confident that the Defense Department is trying to talk the Forest Service into approving the permits, but who knows — and all these people making the decision are human beings, so presumably having more support helps. They’ve been making a pretty good case for more than a decade that their mine is not only going to be responsible, but is actually going to improve the environment in that area, since they have to clean up the old mine tailings and spent ore and deal with the ongoing water pollution and blocked fish migration at the site before they actually start their own mining operation… and that has presumably helped with the permitting so far, and improved the community perception of Perpetua, but it hasn’t exactly put them on a “fast track.” The latest company update is that they expect to publish their final environmental impact statement in December and get a “final record of decision” by March, with other permits coming through in early 2024, and that would lead to a “Construction Decision” in mid-2024. Construction will take 2-3 years, so commercial operations should be underway in 2027 or so. They also have an earlier “catalyst” decision that could impact how investors interpret the probabilities of success, since they should have their draft Environmental Impact Statement in October and that should lead to the “preferred alternative” identification, which is essentially a public announcement that the government is “leaning” toward a particular decision.
The company itself argues that their valuation should ‘re-rate’ to be valued at more than 40% of their estimated net asset value (NAV) once they’ve received permitting approval, which could lead to a return of as much as 200% in that proposed scenario. I’d be surprised if it were that dramatic, particularly because inflation and interest rates are high and their assumption uses a 5% discount rate, which I’d say is extremely low for a speculative mining company, but it could certainly work out that way — particularly if gold happens to be soaring next year as they begin to get their final permits. It hasn’t happened yet, though, despite the continuing progress of their permitting work. Back in 2020, when they did their feasibility study, the stock was at about 29% of their estimate of NAV (with 5% discount and $1,850 share price), and now, using the same exact assumptions, and with the gold price roughly the same as it was then, the stock price says the company is valued at about 13% of their estimate of discounted NAV. Investors are less inclined to see the value than they were three years ago, not more. Maybe they’re being short-sighted, maybe that makes it an opportunity, but investors have been burned by the hope of the Stibnite project many times over 15 years that Midas/Perpetua has been trying to define and then build a new project in this historic mining area, so it’s hard to blame investors for being skeptical. Even with John Paulson still very much on board with the project (Paulson & Co. has been investing pretty aggressively in gold mining companies since 2009-2010, following the crash that brought them a billion-dollar windfall, and has been an activist in the sector, trying to root out wasteful executives and bad M&A, they first invested in Midas with “rescue” financing, mostly in the form of debt, in 2016, but Paulson has since added to its stake and converted his convertible bonds, and now owns 39% of the company… in case you’re wondering, Perpetua was at about $2.75 per share back in March of 2016, when Paulson first invested, and is now at about $3.25).
And, of course, realizing any value has to start with the assumption that gold prices don’t crash, and that they do get the final permits… no permitting process is every completely 100% predictable, and this one has been going on for a Loooong time. They certainly didn’t expect that it would take five years to get from the first draft environmental impact statement to the final EIS, and the feasibility study also came out about 18 months after they were saying was expected back in 2018.
I can see the temptation at Perpetua. The Stibnite Project looks appealing based on their 2020 feasibility study, they have a big gold reserve across their three potential open pit areas (4.8 million ounces, with more in “resources”), and they estimate a short payback period, low costs, and high cash flow once things are operational, along with some potential to expand the mine in the future, but they do also need to raise about $1.3 billion in capital for the initial construction, and that assumes costs haven’t gone up dramatically with inflation and interest rate increases over the past three years… which is probably optimistic. It looks like a pretty decent value on paper, and maybe the government thumb on the scale as they encourage antimony production will indeed help move the permitting along, but it’s hard to hold on to optimism when the permitting and early development process takes so long and costs so much money. Which is why I don’t often get into speculating on junior resource stocks… even though they do occasionally turn into great speculations.
I know a lot of our readers to love a good mining story, though, so don’t let me tell you where to put your speculative cash — if you like the prospects at Stibnite and think they’re likely to finally fulfill that promise, and think it’s worth a spot in your mining stock portfolio, please do let us know with a comment below… and, of course, if you think Del Real is barking up the wrong tree, and you’ve got a better “100X” mining stock to propose, we’d all love to hear about that one, too. Our happy little comment box below awaits your input.
P.S. If you’re curious, a few months ago we looked at the other “biggest gold mine nobody knows about” that Del Real’s colleague Nick Hodge has been touting— that was Revival Gold (RVG.V, RVLGF), which is a much smaller company and smaller potential project, at an earlier stage (at least another three years of permitting work ahead), but also focused on a past-producing gold mine in Idaho.
Yes this is the Old Stibnite mine. It is a few Miles east of Yellow Pine, Idaho and about an hour or two from the next larger “city” McCall Idaho. Perpetua Resources Corp. (PPTA) has their offices a few miles south of McCall. They support local events and are working hard to present a good image in that part of Idaho. But I doubt the Forest Service will approve opening an open pit mine at this location. Check out https://www.idahorivers.org/stibnite. Thats one of many organizations fighting the reopening of this mine. I personally like Thunder Mountain Gold (THMG). Its south and east of Jordan Valley. Access is via a dirt and gravel road. It is on private ground and not in a National Forest. It is not an open pit project. In my opinion investing in either of these mines is just a gamble.
I’m sorry I ever bought into this story. Didn’t put much in because it seemed a complicated story from the beginning with all the required clean-up before getting approval, but it still under-performed even my very limited expectations. Would suggest that anyone looking for a better speculation, check New Found Gold which is already quite large, high grade, served with good infrastructure, close to surface, in a great jurisdiction, has excellent people, and is progressing rapidly – as is the share price.
I wrote about New Found Gold (now NFGC in the US) a couple years ago, but haven’t looked at it since. What’s their timeframe for possible production look like now?
I don’t have any info about production timeframe, but do note with some degree of astonishment that:
“New Found holds a 100% interest in the Queensway Project… just 18km (11 miles) from Gander International Airport (!)…intersected by the Trans-Canada Highway (!) and has logging roads crosscutting the project, high voltage electric power lines running through the project area (!) and easy access to a highly skilled workforce.”
I saw a presentation several years ago by Perpetua. My conclusion was that it’s a reclamation project disguised a a gold mine. Antimony used to be considered a poison until government got involved. In case you haven’t noticed, no government “investment” ever works out – see wind and solar. Projections and “reserves” don’t mean anything ; what you can hold in your hand is the bottom line. The lowest cost gold producer I know of has an AISC of about $770 per ounce, and they pay a dividend of about 8%. Perpetua’s AISC in the 400s? I’m not an expert (if you call me an expert I’ll be insulted), but Perpetua is speculative garbage.
What is name of producer paying 8% dividend?
“Badges, We aint got no badges. We don’t need no badges. I aint going to show you any stinking badges.”
I do love that movie!
I have a bit of bullion gold and silver in my gun safe as a rainy day precaution if things go way South as trade goods. Along with guns ammo, whisky, vodka, and tequila, it could come in handy. I don’t see it as an investment as gold and silver have not risen in price compared to the rate of inflation.
Travis: thanks for the update on the Stibnite gold mining project and laying out all the challenges that lay ahead of PPTA management to build a functioning cash generating mine.
The history alludes to the fantastical dreams of the New Green Deal and the Inflation Reduction Act proponents of EV manufacturing within the US with 80% sourcing of material coming from US suppliers. If it takes as long as you describe to get permits for the Stibnite gold mine how many more years would be required for prospecting, discovery, permitting, financing and construction of the battery and rare earth elements needed for EV’s and other “renewable” energy projects? If 2030 is doomsday, then it is highly unlikely The Green New Deal or the Great Reset will succeed.
In video presentations, Mark P Mills discusses the massive gap and predictable shortfalls between current annual production levels of mineral ores from available reserves of Co, CU, Li, Al, etc and what would be required if even one country were to convert its entire ICE automobile fleet to Battery EV’s. Based on the facts presented by Mills, the promise of cheap, renewable energy of the Green New Deal does not seem feasible from mining and mineral resource and reserve numbers. The amount of environmental degradation caused by massive expansive of new mining projects is little discussed to meet the expanded production levels required.
With all due respect, renewable energy products are not what PPTA is all about. Plus, the prospecting and discovery have already been done. This is not a case where a company is starting from scratch. They have been laying the groundwork for years. However, their goal is not battery contruction or any other renewable energy projects. They are going to dig gold and antimony out of the ground and sell it. They have an agreement in place with a company named Ambri to supply antimony for Ambri to manufacture batteries. And they have grants from the U.S. Defense Dept to work on feasibility studies insofar as providing antimony to government contractors because antimony is used in the manufacture of certain weapons. And while they have been waiting for permitting, the company has already been working on restoration projects in regard to the rivers and the habitat surrounding the area. Yes, there is a lot of work to be done and it is probably several years away from any actual production but the one major permit that the company is waiting for should come through before the end this year or at the latest, 1st quarter of 2024.
I bot some shares in Midas Gold several years ago because this seems like a better than average gamble – and that is what investing in small mining stocks is. There are several unique features here. First, part of the project involves environmental remediation from past mining. Second, antimony is an unusual bi-product from gold mining, although I’m unsure about it’s real economic value. Third, Idaho is one of the best jurisdictions in the US, although permitting is still long and frustrating. Finally, these guys at Pertetua seem pretty good at playing local politics. They have an agreement with the local tribe, they have a community advisory board, they’re playing the antimony game with the government, and they’re schmoozing the Idaho politicos – the Idaho state motto is Esto Pertetua.
Anyway, I’m down about 35% since my investment. However, if they get there permits approved next year – which I think is somewhat likely, the stock will take a jump and I’ll be out. After that, comes the long process of financing the project and that will involve serious dilution for shareholders.
I like the Royalty companies that have profits from producing mines in their portfolio. Sand is a great future prospect.
Royalty companies certainly tend to be much less volatile and risky than junior miners.
Of course, that means you can’t daydream about 1,000% returns from a big discovery.
At first I thought Nick Hodge’s introduction was going to lead me to NOVA MINERALS who do have a 10 Million Ounce Resource in their Alaska Gold Projects. Nova’s Christopher Gerteisen did a very good interview with Kerry Stevenson of Small Caps about 2 months ago and very enlightening . I think is/will be larger than Perpetua (who I am also invested in) Anyway would love to see someone else’s thoughts on Nova as seems under priced.
Hey there, lostmyshirts………………………I posted yesterday about Nova on the Yahoo board. I recently found that they own close to 10% of a company located in Chandler, Arizona that manufactures 2-man helicopters and is now coming out with a drone that can evidently lift heavy equipment, tools, etc. And it looks like Nova plans to use these things in Alaska. Interesting stuff. The name of the company is Rotor X Aircraft, if you want to check it out.
Anyway, I also believe that Nova is underpriced but they themselves recognize that and they are taking steps to get listed on an American exchange. If and when that happens…………..when investors don’t have to buy on the ASX, pay inflated ‘ask’ prices OTC, and when US market makers pick up the stock………………..we will hopefully see a readjustment in their stock price toward something that more closely matches their peers.
I don’t know about 10,000% gains, but Sidney Resources (SDRC) might be a better Idaho story. Warren district, they’ll begin mining this year. Trading about 15 cents, they have some laser mining tech where they’ve teamed up with Raytheon.
Any idea’s on Del Real’s Lithium Crystal Miner for 100-X Battery Gains?
The teaser reappears reworded and pointing essentially to antimony in March 2024. Insiders bought shares in 2024. Top shareholders are serious investors like Paulson and BlackRock. Instead of gambling in Las Vegas you may sink some funds into Perpetua and stay put a year …