Xtra-Gold Financed, Major Drill Program Planned
I went to visit Ghana years ago looking at a gold project. While I was in the country, I also visited another company than the one paying the bills for me. That company was Xtra-Gold. I have kept them on my radarscope and they were a 321gold advertiser for 1 yr, starting Jun 2016. Alas, I wasn’t really able to help them because they were in a slumber-mode. Investors want action and blue sky. Well, Xtra-Gold is about to generate a lot of action and show a lot of blue sky.
One of the reasons I like the company as much as I do is the tendency of the President and founder, James Longshore, to think outside the box. The company was doing well in a known rich gold belt in Ghana up until the gold market tanked in late 2011. Money dried up for always-thirsty junior gold stocks so James put XTG into a sort of state of suspended animation from 2012 until today. The company limped along with some cash flow out of alluvial gold production in Ghana.
He did continue scout exploration and his exploration group found ten new drill targets in the Kibi Gold Belt that they planned on drilling when the market improved. They have at least six high priority targets ready to drill.
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There are times in mining that junior mining companies would be wise to stop spending money. Nobody does that of course. Stop paying themselves absurd salaries for doing nothing? Are you kidding? But Xtra-Gold went one step further. Between 2012 and today Longshore managed to keep the company alive through the alluvial production and only increased the share count by about 3%. Everyone else was either doing rollbacks or blowing their share count so high that they could drill into 500 meters of 24 karat gold without moving the share price.
And even better, Longshore realized the biggest cost for junior mining companies is the absurd cost of drilling. He worked with a drill company to design and build a portable rig especially suited for conditions in Ghana.
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Xtra-Gold believes they can lower the price per meter of drilling by 80%. When a company does that, it means they can get five times the bang for the buck. I’ve seen a lot of the Kibi Gold Belt. If you punch enough holes, you are going to find a lot of gold.
Based on a 2012 43-101, the company has an existing resource of about 425,000 ounces of about 2 gram gold. It’s near surface and oxide gold. With 48 million shares outstanding at a price of $.23 CAD, the market is valuing the company at about $20 USD per ounce. That’s pretty cheap but I think they have an excellent chance of increasing that to well over one million ounces.
Xtra-Gold has an excellent exploration and management team led by James Longshore. They did the right thing for shareholders between 2011 and now by going into a state of hibernation with some gold production. They have had an aggressive program of buying back shares that they intend to continue. Now they are cashed up with over $1 million in cash intended for a serious drill program.
The company is cheap and with my expected advance in the price of gold, I think XTG will be a leader. Do your own due diligence.