That may sound a little cruel of me but when a company plucks a company out of bankruptcy court with a 424,000 ounce gold resource for a nickel an ounce, what the hell am I supposed to call it? But it gets worse.
Midway Gold had gold projects in Nevada and was going into production when a whole bunch of things went south at the same time. The company went into bankruptcy in June of 2015, just six months before a major low in the price of gold. All their projects got dumped onto a judge's desk at a time you couldn't pay people to take gold properties in Nevada off your hands.
Viva Gold Corp. (VAU:TSX.V) walks into the courtroom and buys what they now call the Tonopah Gold project out of hock for $25,000. It came with an M&I resource within the pit of 424,000 ounces after 641 drill holes and 87,700 meters of drilling. It also came with the biggest ball and chain around its neck in Nevada history.
So they stole the project for $.05 per ounce of gold. But getting the project and the attached ball and chain out of the courthouse required one of the 200,000 ton dump trucks with the tires as big as ten elephants standing on top of each other in the form of a 7% NSR. That's why the judge couldn't give the project away.
In all of recorded mining history there isn't a company mining hard rock that could break even with a 7% NSR. It's what's known as a "Deal Breaker." Or better put, "Ball Buster."
This is where it gets really funny. The Viva management group bought a pig in a poke and they knew it. But they also knew that if they could get the owners of the NSR to get reasonable, they had an excellent chance of having the deal of the year. So they go to the guys holding the NSR and said, "Look guys, JC himself couldn't mine this at a profit with a 7% NSR so either get reasonable or consider turning it into the world's biggest tumble weed farm."
The NSR holders thought about it. Tumbleweed futures are at all time low prices so they said, "OK." And they gave Viva a 2% NSR on the Tonopah Gold project. In Tex/Mex that's called, "El Goodo Dealo." But it gets even worse.
Viva Gold is a new company and management hasn't yet taken the opportunity to totally blow out the share structure. So while they bought ounces of gold for $.05, the company has a market cap of $4.6 million CAD or about $3.6 million USD so investors can buy ounces of gold in Nevada for $8.50 USD.
You may safely assume I like the story a lot. Or better said, I love the story. Management saw an opportunity to pick up a nice project for peanut shells. They turned a lump of coal into a blue diamond by getting the NSR dropped out of orbit and have a really tight share structure. What's not to like?
Actually the visibility. Visibility is a real problem.
No one has ever heard of the story and you have to make an appointment six months in advance to give the shares away. What they really need to do is get a US OTCBB symbol so Americans can buy the shares. They also need to find a newsletter writer with some credibility to write up the story so people can understand it.
They have an asset in the Tonopah Gold Project with a quality resource that can be advanced easily. It's a typical Walker Lane gold project. For those interested it is a near surface low-sulfidation epithermal gold system with near vertical quartz-adularia gold veins.
The project is very similar to that of Hasbrouck owned by West Kirkland located a few miles south of the Tonopah project of Viva Gold. West Kirkland has a market cap of about $18 million but about 30% more ounces.
Viva Gold recently completed a private placement to raise just over $1 million. There are 4.2 million warrants at $.35 that would raise another $1.45 million so the company is well cashed up for now.
Viva just announced a 28-hole RC drill program has been approved by the BLM. The company wants to confirm extensions to the known bonanza grade gold bearing veins. It's a 4200-meter program with both in-fill and step-out drilling. The company is aiming to expand the known resource to above 1 million ounces of gold. Viva will complete a PEA in H2 of 2018.
Saying that Viva Gold is cheap is pretty easy. Management has done a wonderful job of picking up a quality asset just in time to ride the gold wave higher. They have cash, management, and are located in the most mining friendly state in the US.
I bought shares in the open market, I was too late to the party to get in on the placement. Viva Gold is an advertiser so naturally I am biased. Do your own due diligence.
Viva is an easy triple even without the price of gold going higher. With higher gold Viva has 500% potential.
Viva Gold Corp
VAU-V $0.32 (May 18, 2018)
14.5 million shares
Viva Gold website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
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1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Viva Gold. Viva Gold is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
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