I wrote about an interesting young company back in February before all the Corona Virus issue. Someone was talking to me recently and the issue of warrants in the company came up. You should read what I had to say about Getchell Gold Corp. (GTCH:CSE) three months ago.
The interesting quandary is over 17 million warrants at $0.14, well in the money. They are two-year warrants but have a potential acceleration clause if the share price closes over $0.25 for over ten days. It's been above $0.25 just recently so that is not an out of the question alternative.
While the liquidity of the shares has gotten a lot better over the last ninety days, if 17 million shares were dumped on the market over a thirty day period to exercise the warrants, the stock would head right back down to $0.14 a share. Then everyone would hate the company. Including me.
I talked to management recently about their plans for the 2020 work season after they put out a press release a month ago. Their prime focus naturally is on the high-grade million ounce plus deposit at Fondaway Canyon. The intention is to put all of their data together to totally reevaluate the resource and future plans including a PEA. There was about 2,500 meters of drilling from the 2017 program that were not included in the 2017 43-101 resource.
I asked about the $0.14 warrants because there are so many of them. And some are being exercised now reducing the overhang but almost all are in really strong hands. Management is fine for cash for now. The warrants would bring in an additional $2.38 million so there is almost a zero chance of a financing any time soon.
I got the impression that the company can go to a few of the strong hands holding the warrants and ask for cash any time they need it. I don't see them needing that kind of money any time soon but it is there for the asking when they will want it. So I really doubt investors have to worry about the company dumping warrants onto the price.
Given the 1.06 million ounce 43-101 resource at over 6 grams and a theoretical exercise of all 28 million warrants the company would have about $6 million in cash and just over 85 million shares outstanding. With a share price today of $0.19 CAD that gives a market cap of about $17 million CAD or $12 million in US pesos. Again, using US pesos because after all we are talking Nevada, the rock in the ground is over $330 a ton. Someone is going to want to mine that one day soon.
I don't know many companies with US projects are selling at a price of under $12 an ounce of high grade gold in USD. That is not going to last for long, warrants or not.
Getchell did a great deal with perfect timing. The idiots in the Fed have guaranteed that resources are going to be the last game in town. Investors have no idea of what a zero brainer investing in gold and silver will prove to be. When I saw oil down to a negative $37 one day last week, all I could think about was the $650 trillion in derivatives blowing sky high and neither Wall Street nor Washington see it coming.
One day, not next week or even perhaps next month, you will see gold up $100 in a day. Fasten your seat belts; there is no bull market like a gold bull market.
I owned shares in Getchell before they did this deal in Nevada. I participated in the latest PP and the company is an advertiser. Naturally that makes me biased. Do your own due diligence. It is will worth your time to go through their excellent presentation. They have four other gold, silver and copper projects in Nevada.
GTCH-C $0.19 (Apr 28, 2020)
GGLDF-OTCQB 54.8 million shares
Getchell Gold Website
Robert J Moriarty
Bob Moriarty founded 321gold.com, with his late wife, Barbara Moriarty, more than 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.[NLINSERT]
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