Sometimes it happens that an asset can benefit from a new set of eyes looking at it from a different perspective. That is exactly what seems to be happening at the Los Filos mine in Mexico. Goldcorp Inc. (G:TSX; GG:NYSE), the previous operator of this mine, decided to focus on other projects due to its new 20/20/20 strategy (in the next five years achievement of 20% growth in gold production, 20% growth in gold reserves and a 20% reduction in our all-in sustaining costs) put in place by new CEO Garofalo, and put the mine up for sale.
Several parties were interested, but Leagold Mining Corp. (LMC:TSX.V) made the winning bid. Leagold appeared to be a special purpose vehicle: created for the sole purpose to acquire this mine in Mexico's Guerrero Gold Belt. but it is meant for much more. Looking at the company's management team, built around well-known founders Neil Woodyer and Frank Giustra, the Los Filos mine is the very first step of Leagold Mining. This company is destined to achieve great accomplishments, and the current valuation of the company is definitely just the beginning.All presented tables are my own material, unless stated otherwise.
All pictures are company material, unless stated otherwise.
All currencies are in U.S. dollars, unless stated otherwise.
Leagold just finalized the financing which was completed simultaneously with the acquisition of the Los Filos mine. As the company's management team is one of the main parts of the investment thesis, I will discuss the executives later in this article.
Trading in Leagold is currently still halted (however, it will resume trading on Monday April 10) as the company has just completed the acquisition of the Los Filos project from Goldcorp. The company is also closing the concurrent financings to fund the purchase and to make sure it has additional working capital to ensure a smooth transition.
After all financings (two equity financings and one debt financing) will have been completed, Leagold will have 151 million shares outstanding, giving it a pro-forma market capitalization of approximately CA$415M, based on the CA$2.75 share price level the company is raising money at. As this acquisition will be a complete game-changer for Leagold, which was a shell until now, the average daily volume should increase pretty fast, making this one of the most liquid companies on the TSX Venture. It doesn't happen every day to see a shell acquiring a producing asset with an average annual output of in excess of 200,000 ounces of gold, giving it instant cash flow to immediately pursue its growth plans, to advance toward a mid-tier producer.
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The Critical Investor Disclaimer:
The author is not a registered investment advisor, and currently has a long position in this stock. All facts are to be checked by the reader. For more information go to leagold.comand read the company’s profile and official documents on sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.
The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, with an MSc background in construction/project management. Number cruncher at project economics, looking for high quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long term commodity pricing/market sentiments, and often looking for long term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources which more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.
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