Lots of junior mining companies get funded and drill during each mining cycle—but few can monetize their assets either by selling them at a hefty premium or raising the CAPEX needed to put them into production.
So when I see the two best “monetizers” in the resource sector get together, I know A Big Deal is just a matter of time.
Watching Paul Matysek get ready to monetize his GOLD X MINING (GLDX-TSXv) is like watching a detective put all the clues together in a mystery. As usual, he is not starting flat footed – 20 years of work and US$150 million have gone into getting Gold X’s Toroparu Project to this point.
I started watching Gold X in April when Paul was announced as CEO and Chairman and he took down a big financing at 95 cents to give him some incentive. I love to see management write a big cheque. I bought the stock in the subscriber portfolio at $1.68. It’s almost a triple for me in just a few months.
This story follows Paul’s MO from other deals he’s done
- find a big undervalued asset (in this case 7.35 million ounces of measured & indicated gold resources
- with exploration upside
- AND an engineered 5 million ounce open pit mine plan that is in the final stage of receiving it operating permit
- de-risk the project technically and commercially,
- and ride the commodity price wave to monetization.
He had been in the background for a few months looking after a lot of the little things, but since coming on board as a Strategic Advisor in November has made significant changes with broad strokes.
The company needed a fresh name for this cycle. Paul uses the letter X or the word ONE in his company names, so he put his stamp on it with Gold X.
He did a reverse split so it wasn’t a penny stock.
With the help of his old Lithium X team (Bassam Moubarak & Brian Paes-Braga), Paul raised the US$20 million in a debenture led by Wheaton Precious Metals and Gran Colombia Gold to buy out the local partners interest and secure 100% ownership of Toroparu.
With that done, Matysek took over the reins as CEO and Chairman, joining CFO/Director Moubarak.
It did not take him long to show investors he was thinking outside the box. He made a bold move with Gold X largest shareholder, Gran Colombia Gold (GCM-TSX) to bid for neighboring Guyana Goldfields (GUY-TSX) and its Aurora underground Gold deposit and gold processing facility.
While ultimately outbid by Zijin Mining, Paul showed the industry, the markets, and the country of Guyana that he was willing to break conventions to develop Toroparu.
Most recently, he got all of its debenture holders to convert their loan (cumulatively US$20 million) into stock at C$3.20 a share–28 months before the actual exercise date.
Gold going to $2000+ per ounce helped that cause, but it still saves the company close to US$5 million in interest payments. So now there is no debt in the company, and they own their asset 100%.
Then, out of the blue, comes a name every mining investor in the world knows–Robert Friedland. He joins as Non-Executive Chairman in late June 2020.
Friedland brings a lot of optionality to the GoldX story.:
- He could sell ice cubes at the North Pole; he can monetize as well as Matysek AND his Asian network in mining is incredible
- if they decide to build Toroparu, Friedland can not only raise the CAPEX required to get it into production, he has the technical bench strength within his team of mine builders.
Friedland and Matysek have a long history, working together to sell Potash One in 2010 for over US$300 million to K+S, who subsequently spent $3+ billion putting their Saskatchewan potash mine into production, creating over 400 full time jobs.
Between them, Robert and Paul have built and sold junior resource companies for a combined total of more than $7.5 billion—much of that to foreign companies.
Now, 10 years later, they are working together again–at Gold X, with gold over US$2,000/oz and looking to go a lot higher. There are precious few assets of this size that can be open-pit operations–and that is this far advanced. There is HUGE leverage to gold here.
I asked Matysek about their strategy going forward.
“First off, it’s great to work with Robert and his very capable group,” he said in a recent phone interview. “They can build and operate big mines. And he makes his shareholders a lot of money.
“Having Robert as our Chairman gives us enhanced optionality of building out our 7 million-ounce Toroparu assets. We are doing a deep dive geologically and technically and looking at infrastructure possibilities. We are seeing some very interesting features.”
GoldX just announced a new access road to tidewater, that also provides a transmission corridor from the Gold X hydroelectric project through Toroparu to Aurora, taking them even closer to Guyana Goldfields’ Aurora mine and a potentially under-utilized mill. Just sayin’. It’s all the little things that increase optionality and create shareholder value.
Matysek says both he and Friedland are working hard to maximize the value of Toroparu. They’re doing a lot of work technically, though Toroparu is in the sweet spot for what larger miners want–so they don’t really have to do much.
“I can tell you there is a premium for those companies that have four or five or six million ounces in the ground and preliminary cost optics under $800 per ounce. There is an increasing number of companies looking for the size and scale that Toroparu, with 7 million ounces, can give them.
“Look at Zijin, for instance, a gold mining giant that just bought Guyana Goldfields on the heels of purchasing Continental Gold in March for US$1 billion. That deal came about a year after acquiring the Timok gold project in Serbia for US$1.4 billion.
“They went on a shopping spree and transformed themselves into a US20 billion +company. Since March they have almost doubled their share value.
“I think that’s super smart. They are not exploring, they’re buying large resource assets that are in the ground. And I think that’s what you will be seeing other companies doing.”
So the set-up is now perfect. The asset, the gold price and The Top Two Monetizers in Junior Resource are working hard. The team is there to build it now. But I’m a shareholder here and I’m saying—Show Me The Money!