Leader of the Pack
Jul 24, 2013
In hindsight I think it will be easy for most investors to recognize that we have been going through a bottoming process for months. Sentiment is lower on gold and silver than ever before. Yet the very real problems in the world’s financial system still exist. Nothing at all has changed. Many investors have thrown in the towel and dumped their resource shares at any price.
Of such actions bull markets are born. I’ve said for months that this is not rational investing; it is the behavior of funds dumping great stocks at any price just to get liquidity. I’m convinced I’m right and the market is proving it.
The really good stocks that went down 60-70-80% on no change in their business model and they will be the first to recover.
One of my favorites is Pilot Gold. (PLG-V) I visited two of their projects in Turkey last September and wrote about them when the stock was $1.65. In the months following my piece, the price got as high as $2.40 before crashing to $.71 a few weeks ago. But nothing changed, they still had great management, they had $39 million in the bank, they had great projects and keep releasing great results after great results after great results.
Pilot Gold is in a deal with Teck on the Halilaga 40/60 JV in Turkey. It’s a gold-rich, copper porphyry with 380 million tonnes of rock. They have an indicated 1.1 billion pounds of copper and 1.66 million ounces of gold with another billion pounds of copper and 1.66 million ounces of gold in the inferred category.
In another Turkish JV with partner Teck, Pilot owns 40% of the TV Tower gold/silver project on the Biga Peninsula. They are earning an additional 20% of the project by spending $21 million in exploration. The JV calls for Pilot to issue Teck 6.5 million shares and 3 million warrants as part of the deal to earn the additional 20%. And Pilot needs to pay Teck $20 per ounce for 20% of all the gold in a 43-101 resource above 750,000 ounces.
The project that I expect to see some giant surprises from is their Nevada JV with Nevada Sunrise called Kinsley Mountain. Pilot just announced a 20,000-meter drill program. Kinsley Mountain is a Carlin Style deposit some 90 Km from Long Canyon. Long Canyon was the main project for Fronteer Gold that was created by the same management team of Pilot. Fronteer was sold to Newmont in 2011 for $2.3 billion.
The numbers for Pilot get simply stupid. After a steady supply of great drill results from TV Tower starting in September of 2012, the stock dropped by 70% from January of this year to a miserable $.71 three weeks ago. That was the same time as the company had $.46 a share in cash. I believe the market has bottomed and sanity has begun to return to the market as the stock has rocketed from $.71 in late June to $1.16 today. The TV Tower project interferes a value of $60 million just for TV Tower.
Pilot Gold has one of the best technical and management teams in the business. It has three world class projects that they are busy advancing as everyone else in the business scratches their heads trying to figure out how to raise enough money for their paycheck next month. They have a proven ability to convert great projects into cash. In short, they are the perfect wager on gold and silver.
Pilot Gold is an advertiser. I am biased. As always, do your own due diligence.
Pilot Gold Inc
PLG-V $1.16 (Jul 23, 2013)
PLGTF-PK 86.8 million shares
Pilot Gold website