African Gold Group (AGG:TSXv) is the soon-to-be junior gold producer that will be churning out millions in cash flow, as their Koboda Gold Mine ramps up to 50,000 oz per year, then 100,000 oz per year.
I can’t believe the stock is still trading for pennies – 40 of them buys a share!
Management’s timing here was impeccable. They bought the Koboda asset in 2016 when nobody cared about development projects. In 2015, Koboda was a large, simple gold deposit, at surface, and ready for production. But no one wanted it – even though it is surrounded by multi-million ounce producing mines!
The base case on the 2015 feasibility study said Koboda would generate excellent returns at $900.
And now it will into production with gold trading at $1,500 per ounce and rising.
Now this project is going to be an absolute home run. And it’s still trading for pennies. Crazy. I think investors here stand to make HUGE gains. That’s why I’m long.
At $1,500 per ounce Koboda will generate tens of millions in cash flow. The 2015 feasibility didn’t even have $1500 gold in any of its charts. Nobody thought Gold would go this high then.
This team has made Big Money before in West Africa. They bought the Tabakoto mine – which was having real problems – for $20 million. They turned it into a 150,000 oz per year producer and sold it to Endeavour Mining in 2012 for nearly $400 million. Almost 20x their money in two years!
That’s Big Money in a short amount of time.
And that’s what I see happening here at Koboda. There’s 2 million ounces so far – but only a small portion of the property has been explored. There’s huge upside for millions of more ounces.
An aggressive drill program will be starting ASAP, and those numbers should help get the story a much bigger – and eager – audience.
The asset is permitted – construction could start tomorrow.
They bought it for almost nothing… management acquired this mine in the doldrums of a decade of stagnant gold prices.
It was like buying a house at the bottom of the U.S. Housing Crisis.
Buying at the bottom meant that African Gold Group was able to get this project that is profitable at $900 per ounce gold at a throwaway price.
They had the foresight to identify and buy a highly economic project when nobody else was interested. But trust me, everybody is going to be interested now.
Here’s an asset that is
- 2 million ounces and growing
- Fully permitted
- At surface, so…
- Cheap mining – All-In-Sustaining Costs are $788/oz
- Low capex – this mine will only cost $45 million to get to its initial 50,000 oz per year
- And in the hands of a team that has built and sold juniors before – for nearly 20x their money in two years!
I’ve met and talked to the team – they can raise the money. In fact, if Gold is still moving up while they’re building the mine, the plan for the Koboda Gold Mine will be to go straight to 100,000 ounces per year of gold production – gushing even more cash.
I believe the time for investors to be buying African Gold Group is now – before all of the money that is starting to flow back into Gold ETFs discovers it. That’s why I bought 450,000 shares.
This Is A Historic Buying Opportunity
For Junior Gold Miners
Mark my words….
This is the single best time to be buying junior gold miners in years, as central banks, sovereign wealth funds, major pension funds, index funds and retail investors all start buying gold and gold stocks – at the same time!
I’ve been through these cycles before – in the early 1990s and again in the 2000s – if you take the time to find a truly exceptional junior miner you are going to make a fortune.
Not a double or a triple; I’m talking the next 20 and 30 baggers are going to be the best junior gold miners.
I did my homework. I spent hours researching assets. They had to be in companies with tight, clean share structures and managed by teams with a track record of success.
African Gold Group is the one that met all my criteria.
There was just no mystery here – if you believe Gold will continue to be strong for a couple years – and I do – picking a stock with its major catalyst two years out means you’re getting the cheapest price and the biggest bang for your buck.
In 24 months this low-cost project will be producing gobs of high margin gold.
By then the stock price is going to reflect that fact… which I expect to be multiples of the current 50-60 cents a share.
But… investors can expect the stock to move up a lot quicker than that… because I believe that there is huge upside to the current resource estimate coming soon.
Koboda already has 2.2 million ounces of gold – with less than 10 percent of the project’s footprint explored.
African Gold Group is now set to drill up more of that land. And as that happens I’m expecting this resource estimate to grow… and potentially grow in a major way.
There are no less than 10 gold mines in the gold belt that African Gold Group operates in that are already larger than Koboda.
The upside here would explain why management is working on optimizing the existing feasibility study… to double planned production levels from the original plan of 50,000 ounces to 100,000 ounces per day.
Everything about Koboda smells like a major gold mine.
Here Are The Catalysts To Watch For
In The Coming Weeks
African Gold Group is indisputably a cheap stock.
But I never buy cheap stocks and hope the market finds them.
There is no sense owning anything if you don’t see a catalyst.
African Gold Group is going to be a catalyst machine in the coming weeks and months.
Here is what I see happening….
Catalyst #1 will be the Gold ETF Fund Flows….
For years cash has been constantly sucked out of this sector.
With gold busting through long-term resistance these ETFs will suddenly become massive buyers of junior gold miners, and as African Gold Group nears production, they will be big buyers.
I want to get in front of that trade. Now is the time to do that.
Catalyst #2 will be African Gold Group’s drilling results….
There aren’t going to be a few holes drilled into unexplored portion of this project in the coming 18 months.
There are going to be wells drilled every week.
Each and every one of those wells has the potential to be a stock moving catalyst.
And you can bet this management group is going to be excited to tell you about them.
Catalyst #3 will be an updated feasibility report….
The most telling signal that there is going to be resource upside for Koboda – is that management is currently working on a major update to the existing feasibility report.
I don’t know what the size of the resource increase is likely to be.
What I do know is that management is planning to increase the Koboda plans from 50,000 to 100,000 ounces per day.
I would expect to see that before the end of this calendar year.
It will be a stock price moving event.
Catalyst #4 will be first production….
24 months from now this Koboda mine will be producing gold and generating cash flow.
At $900 per ounce gold that cash flow will be strong.
At $1,500 per ounce gold that cash flow will be exceptional.
If we get the $3,000 per ounce gold that many great investors expect then look out above…
I’ve thought this strategy through and picked the best asset, with a strong team, a tight share structure, and major near-term catalysts coming. That’s why I’m long 450,000 shares.
This article has been sponsored by 2227929 Ontario Inc, and is based on publicly available information on www.sedar.com. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.
Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.