Coral Gold (TSXV: CLH) is currently sitting on a HUGE cash position of CAD$18.21 million and with only 47.7 million shares outstanding, CLH has $0.382 per share in cash! At CLH's current share price of $0.395 per share, its enterprise value is only CAD$620,000! In NIA's opinion, CLH has nearly zero downside risk and will likely finish the year at a share price that is 50%-100% higher! (CLH is actually trading for well below cash when we factor in additional cash the company is guaranteed to receive!)
This past Wednesday, Coral Gold approved a HUGE share buyback to occur over the next 12 months of up to 2,950,485 common shares, which is equal to 10% of its public float! With this buyback, Coral Gold has a clear path towards becoming a $4-$6 per share stock by 2021!
Earlier this year, Barrick Gold and Newmont Mining combined their Nevada gold mines into a joint venture company called Nevada Gold Mines (61.5% owned by Barrick Gold and 38.5% owned by Newmont) to create the single largest gold-producing complex in the world. In 2018, the operations of Nevada Gold Mines produced 4.1 MILLION oz of gold, more than double the world's next largest mining complex and equal to 60.74% of all U.S. gold production!
Last month, US Secretary of the Interior David Bernhardt visited Nevada Gold Mines' Cortez Mine where he was hosted by Nevada Gold Mines’ executive managing director Greg Walker. Click here to read Barrick Gold's press release about his visit!
According to Walker, Nevada Gold Mines is "destined to be one of the world’s greatest gold mining operations and planned to mine several world-class projects in its immediate and longer-term future. These include newly identified deposits at Goldrush, Robertson and perhaps Fourmile, as well as the expansion of the existing ore bodies at Cortez Hills, Pipeline and other locations. These growth projects will continue to provide a broad range of employment opportunities for years to come."
This statement officially confirms that Nevada Gold Mines 100% intends to bring Robertson into production and indicates that their ongoing drilling at Robertson has identified new gold deposits! Barrick acquired Robertson from CLH in mid-2017 and CLH received a sliding-scale NSR royalty worth 1.5% at current gold prices and will be worth 2.25% once gold surpasses $2,000 per oz!
If Robertson doesn't enter production by December 31, 2024, on January 1, 2025 Nevada Gold Mines MUST begin paying CLH an annual cash royalty payment of USD$500,000 or CAD$665,600 until the mine enters production (for up to 10 years). This means CLH is guaranteed to AT LEAST receive another CAD$6,656,000 or $0.14 per share in cash from Nevada Gold Mines!
Coral Gold is an absolute STEAL below $0.522 per share because it already has $0.382 per share in cash with no debt and is guaranteed to AT LEAST receive an additional $0.14 per share in cash in the future!
In NIA's opinion, Nevada Gold Mines is likely to bring Robertson into production by 2023 and it will likely contribute 300,000 oz of gold per year to Cortez's gold production. By then, gold will likely be trading for over $2,000 per oz, therefore CLH will receive a 2.25% NSR royalty and earn income of at least USD$13.5 million or CAD$18 million per year. In this scenario, CLH will likely deserve a market cap of between CAD$180 million and CAD$270 million (10-15X revenue based on the likely mine life of Robertson), which will value CLH between $3.77 and $5.66 per share based on its current low share count of 47.7 million!
If Coral Gold repurchases 2,950,485 common shares over the next twelve months to reduce its shares outstanding to 44.75 million, a market cap of between CAD$180 million and CAD$270 million will value CLH at $4 to $6 per share! Keep in mind, we are not giving CLH any additional value for their JDN, Norma Sass, and Eagle projects in Nevada. Each project has potential to become another Robertson.
The stock market is always forward looking so we expect the market to begin valuing CLH based on the above scenario approximately two years in advance. If Nevada Gold Mines continues progressing at its current rapid pace at developing Robertson, CLH could reach the above valuation by 2021! In 2020, we expect Nevada Gold Mines to release a Prefeasibility Study for Robertson, which will allow the market to fully understand the economics of Robertson and the income CLH will likely receive from its royalty!
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. Never make investment decisions based on anything NIA says. This message is meant for informational and educational purposes only and does not provide investment advice.