Baru Gold to go into Production
On the strength of a 4 million ounce gold resource, a company formerly known as East Asia Minerals, now Baru Gold (BARU-V) shot to a high of an adjusted $87 a share in 2010. Eric Sprott was the biggest investor, holding 18% of the company and saying, "Gold deposits of consequence are very hard to find today, and it's rare for an exploration company to return such compelling drill intercepts so early on in their exploration efforts. "There are few companies in the gold space that we know of that have a project like Miwah."
Mismanagement and the carnage of the resource stock bear market of 2011 to 2016 took the stock down 99.9% to a low of $0.015. In 2010 the company had an $800 million market cap. It is $20 million today. Eric dumped his shares but Tocqueville still owns 15% of the shares and new management and other strategic investors control an additional 35% of the stock.
The gold is still there. A different management team took over in 2017. They raised $6 million in 2020 and worked out $3 million in liabilities. Current plans call for 25,000 meters of drilling at their 266,000-ounce Sangihe gold project along with construction of two 100,000 cubic meter heap leach pads.
The company is raising $1.6 million to use for going into small-scale production in early 2022. Baru is intending to produce 1,000 ounces of gold a month from the heap leach operation with the first pour to take place in Q1 of 2022. That is not going to set the resource world or the stock on fire however they plan on expanding the available oxide resource with the drill program. They anticipated a $900 AISC cost on the phase one leach operation at Sangihe.
Indonesia can be a difficult country to operate in for a junior mining company. East Asia Minerals sunk $60 million into their primary project, the Miwah Gold project with a 43-101 resource of 3.14 million ounces of gold. After drilling 20,000 meters in the project, a lack of cash and a forest moratorium implemented by the previous government brought a halt to the project in 2015.
Starting in 2019 under the new management team, the company began to hold meetings with Federal and regional Indonesian officials to bring the Miwah Project back into compliance with local and national requirements. Naturally their success or lack of success will have a large impact on the value of the company but for now it is a work in progress with progress not guaranteed.
I admire management for sticking with the project and trying to move the company forward. Going into production will make their financial life a little easier. If they can bring the government officials into agreement with their future plans at Miwah, their market cap could return to the $800 million of 2010. It’s a crap shoot but interesting.
I had participated in two different private placements three years ago and bought shares in the open market. When the company failed to make the progress that they hoped, I sold all the shares. Currently I do not own shares. Baru is an advertiser and as such I am biased. I would love to see them actually get into production and succeed with their major gold project.
Baru Gold Corp