Given all the mutli-bagger gains investors have netted from gold’s surge, it can be natural to think all the big winners have already been found.
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But that couldn’t be further from the truth. Simply put, this a generational bull market that will take years, not weeks, to play out.
So investors are rightly searching for top-quality junior gold companies that may have been passed by in this emerging gold rush.
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And as you’re about to see, one prime candidate has emerged: Mexican Gold Mining Corp. (MEX.V; MEXGF.OTC).
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It’s hard to believe that a company with a large, high-grade gold resource has been overlooked in the initial, stimulus-led surge for gold. But the fact is, Mexican Gold is quietly building a compelling development and exploration story around its flagship Las Minas project in Veracruz, Mexico.
Management’s aggressive plans for this project, combined with gold’s bright future, make it a great lever on rising precious metals prices.
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An Established, High-Grade Resource
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Those plans start with simply telling Las Minas’ story to more investors, a project that management is engaged in as we speak.
Central to that story is the existing high-grade resource MEX has to build on at Las Minas.
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| Las Minas lies in a section of Veracruz that’s fertile for mineral deposits |
The past-producing deposits at the Las Minas project have lots of gold remaining: Together, El Dorado and Santa Cruz boast almost 900,000 ounces of gold (645,000 ounces of indicated gold-equivalent and 217,000 ounces of inferred gold-equivalent).
All by itself, this very mineable grade resource, which lies relatively near to the surface, is an asset that argues for a very significant re-rating of Mexican Gold Mining.
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In a market where many companies with similar resources at this stage are trading for $50/ounce, Mexican Gold is currently trading for less than US$12/ounce.
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A valuation double or triple that level, based on this resource alone, seems more than warranted.
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Upcoming Catalysts Will Soon Put Mexican Gold On The Market’s Radar
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But management has no intention of resting on its laurels at Las Minas.
Plans are fully in motion to generate a preliminary economic assessment for the project. That process includes:
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• Resource expansion drilling: On and around the El Dorado and associated Dike Contact deposits
• Resource conversion drilling: To upgrade as much of Las Minas’ inferred resources as possible to the indicated category
• Metallurgical work: Build on 2015 metallurgical work that demonstrated excellent recoveries (88.8% gold, 95.4% copper, and 84.2% silver)
• LiDAR DTM: This airborne geophysical survey will help MEX plan surface works and infrastructure and get a better feel for near-surface ore profiles
• Environmental: A baseline study is underway as part of a steady de-risking of the project
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| Las Minas’ El Dorado and Santa Cruz deposits both offer easy mining access |
Given Las Minas’ strong recoveries, the presence of key infrastructure, and the easy mining access offered by both the El Dorado and Santa Cruz deposits, the PEA’s economics have the potential to wow the market when it hits early next year.
And that’s not even factoring in the possibility that a revised cutoff grade for Las Minas in the PEA could greatly increase the mineable resource base there.
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The Big Catalyst:
10,000 Meters Of Drilling Underway Right Now
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With the PEA several months away, though, you may wonder how MEX plans to stay on the market’s radar in the interim.
The answer is simple: drilling — 10,000 meters of it.
In addition to the expansion and infill drilling on the known resources at El Dorado and the Dyke Contact zone, management will also follow up on the high-potential Cinco Senores and Changarro targets.
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| Drilling on Las Minas’ Cinco Senores and Changarro targets provide exploration blue sky to the project’s already compelling development story |
Drilling last year on Cinco Senores vein included an uber-high-grade hit (5.2 meters of 8.94 g/t gold, including 2 meters of 21.37 g/t gold).
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This year’s drilling to expand this target promises to deliver more assays into a market that’s ravenous for high-grade hits like these.
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And then there is the distinct possibility that the drills will tag into something much more significant at Changarro…
You see, this area of historic mines — exploited more than a century ago — averaged 8.83 g/t over 52 meters in sampling conducted by Mexican Gold just last year.
The expansion potential via drilling below this sample is yet another reason Mexican Gold’s aggressive program at Las Minas could spike its share price in the weeks ahead.
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A Rare Chance To Get In Early
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So far, the broader market has been asleep at the switch on Mexican Gold’s potential, but that’s likely to change…and soon.
Get this: Mexican Gold’s market cap is still below C$15 million — a rarity in this red-hot market where companies with zero resources can trade for a multiple of that valuation.
Moreover, MEX has many avenues for significant growth in the days ahead:
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1) The company’s recent marketing efforts will put more eyes on the story, encouraging a re-rating based solely on Las Minas’ current in situ resource.
2) The PEA, which is likely to demonstrate compelling economics, should attract both individual and institutional investors to Mexican Gold.
3) High-grade hits from the current drilling program could capture the market’s attention within days, just as traders are returning to their desks from summer vacations.
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With almost C$2 million in its treasury and a game plan to deliver results for shareholders, Mexican Gold is priced to move in the current market.
But given gold’s upward trajectory and the hordes of generalist investors who continue to pour into this sector, this overlooked story isn’t likely to stay overlooked for long.
Timing is everything. To maximize your profits in this gold and silver bull market, we need to get into the best stories early.
And that means investors need to take a hard look at Mexican Gold Mining Corp. now — before the market discovers this overlooked gem.
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