White Gold Delivers, Investors Don’t
White Gold is one of those companies with great partners, Kinross Gold as well as Agnico Eagle, over 1.7 million ounces in a gold resources in one of the best gold camps in Canada but can’t seem to get any respect. At the end of December of last year the shares traded as high as $1.69 but have tumbled lately to a new yearly low of $.73.
I’ve said this before and I’ll keep saying it until everyone gets it. The key to making a profit in investing is to buy when things are cheap and sell when they are dear. White Gold has gone from $.54 in September of 2018 up to $2 a month later and has dribbled back down. Surely there was a lot of potential to trade those shares at a profit in there somewhere.
In spite of the bundles of crisp $100 bills being tossed on a bonfire by the Fed since a Black Swan event in mid-September that no one can seem to figure out what caused, speculators in gold got carried away. The open interest hit a new record high and lately the price dropped a lot as gold is making a perfectly normal correction. Generally we have a low in mid-summer and at the end of the year at Tax Loss Silly Season and I think this year will be no different.
White Gold had fifteen million warrants from a 2016 private placement that expired on October 27th. The warrants were at $.27 so you may safely assume all of them were exercised. The good news is that it brought in $3.35 million in cash to the treasury. The bad news is that due to a basic lack of liquidity sellers of the shares in order to exercise their warrants have driven the price of the stock down by 25% in the last month even while the company is charging forward.
Part of the price mismatch is due to investors being overloaded with information on the various projects White Gold is advancing. White Gold controls over 40% of the land in the White Gold district including 35 different properties. White Gold is not advancing one or two flagship projects; they are advancing the entire frigging district.
The company’s 2019 exploration program called for 17,000 meters of core drilling and an additional 7,500 meters of Reverse Circulation drilling. A revised 43-101 just based on the 2018 exploration work was released in late July. It showed a 25% increase in 43-101 resources at the Golden Saddle and Arc projects to over 1.5 million ounces of gold.
I fear investors are getting bogged down in minutiae as one press release after another is posted and they are simply confused. Rather than trying to understand the numbers to compare with other companies with drill programs only 10% of the size of White Gold, investors should think about the big investors in WGO, Kinross and Agnico Eagle.
Each company owns about 18.9% of the shares. All in all, about 60% of the shares are in the hands of insiders leaving a relatively small float of 40% for everyone else.
The gold exploration space has changed over the last twenty years. The majors and mid-tier mining companies have left the exploration business. And each year they consume more and more of their young. So in the near future the big mining companies must go on a binge of buying up juniors with real resources in friendly environments.
White Gold serves as the exploration arm of both Kinross and Agnico Eagle. When the proven resource gets big enough and the price of gold high enough we know that one or both of those companies will belly up to the bar and buy WGO.
So you can safely ignore drill results such as 24.38 meters of 23.44 g/t gold at JP Ross, 3.59 g/t Au over 68.0m, 83.13 g/t Au over 2.2m, 30.86 g/t Au over 7m and 24.86 g/t Au over 7m. Knowing that the company reported grab samples of 605 g/t Au, 497 g/t Au and a further 113 g/t Au doesn’t necessarily tell you what you need to know but I can guarantee Kinross and Agnico Eagle realize what those results mean.
I was buying Great Bear Resources at $.50 a share before they started releasing extraordinary results. I knew and I told them they were on to something big. Great Bear is now $5.87 a share and they have a $248 million market cap. White Gold closed at $.77 on Friday and shows a $95 million-market cap. In my view White Gold is the better company but it has a market cap only 40% of what GBR has.
The price is cheap today because (1) investors can’t cope with half a dozen projects being advanced at the same time and (2) a flood of shares being sold to pay for the $.27 warrants. As to (1), ignore it; you don’t have to keep track of a bunch of projects. Let Kinross and Agnico Eagle do your due diligence for you and (2) as the overhang of shares stops since the warrants have expired, expect a pop in the share price.
I’m looking for the correction in the price of gold and silver to continue. Mid-December would be a great time for a low if the DSI goes below 10 for both of them and Tax Loss Silly Season ends. But while I see a lot of juniors declining into year-end, I suspect WGO will go higher. The reason for their decline in price has passed.
White Gold is an advertiser and I bought shares in the open market. Do your own due diligence.
White Gold Corp