Source: Streetwise Reports
November 13, 2023 (Investorideas.com Newswire) Part of turning any mine from a simple asset into a productive one involves ensuring adequate financing. Thanks to a large private placement, one Canadian mining firm is poised for a productive couple of years.
Goldshore Resources Inc. (TSXV: GSHR;OTCQB: GSHRF ;FWB: 8X00) is a Canada-based junior gold development company focused on the acquisition and evaluation of precious metal mineral properties in Canada.
The company owns 100% of the Moss Gold Project. Located in Ontario, the Moss Gold Project is located approximately 100 km west of the city of Thunder Bay, Ontario, and is accessed via Highway 11 (the Trans-Canada Highway), which passes through the northern boundary of the Project.
The Moss Gold Project comprises some 432 Mineral Claims (15,039 hectares), two mining leases (215 hectares), 48 Patents (836 hectares), and five mining licenses of occupation (534 hectares) for a total project area of some 16,625 hectares.
The Catalyst: New Partner, Private Placement
On November 2, Goldshore Resources announced a "non-brokered private placement for aggregate gross proceeds of CA$3,750,000." The announcement indicated that in connection with Private Placement, the company would issue 37,500,000 units at a price of CA$0.10 per Unit. Each Unit consists of one common share and one common share purchase warrant. Each Warrant will entitle the holder thereof to purchase one further common share (a "warrant share") at an exercise price of CA$0.13 per Warrant Share for thirty-six months from the date of closing.
In its press release outlining the new financing, the company explained that "the net proceeds from the private placement will be used to continue to advance the Moss Gold Project through development of a new resource model and a new mineral resource estimation; in addition to continuing the engineering and metallurgical studies being done on various leach methodologies (including heap leach) and ultimately factoring this new information into a preliminary economic assessment."
"With 80,000 meters of drilling completed and CA$48 million spent directly in the ground defining the current MRE," the release continues, "Goldshore is well positioned to achieve meaningful project milestones over the next 24 months with minimal cash expenditures and within the net proceeds and current cash balances of the company."
In addition to the new financing, Goldshore Resources announced its engagement with "a strategic natural resources private capital group participating, in aggregate, in the Private Placement for CA$3,000,000 or 30,000,000 Units, with a long-term financial commitment to unlocking the value of the Moss Gold Project and delivering increased return to all stakeholders."
Goldshore Resources President and CEO Brett Richards stated that the company welcomes "this partnership with our new strategic shareholders, who are committed to advancing the project through its next stages of development."
"This financing and partnership," he continued, "represents a new phase for Goldshore and is key to unlocking long-term value and driving success."
Why This Sector? Gold in Global Demand
"The macro for gold has never been better in the last 25+ years," Richards explains. "The U.S. is leading into its primaries and Presidential election during a financial crisis of inflation, stagflation, rising interest rates, cryptocurrency crises, and a looming recession. The government has no alternative but to introduce quantitative easing in 2023-2024 to avert a major recession during an election year. This is setting up to be the perfect storm for gold."
"Gold equities have been significantly depressed (-30% to -70%) in the last 12 months," he adds, "leading into what might be the biggest bull run of precious metals in a generation."
According to a market research study published by Zion Market Research, "the demand analysis of Global Gold Mining Market size & share revenue was valued at around US$198 billion in 2022 and is estimated to grow about US$260 billion by 2030, at a CAGR of approximately 3.5% between 2023 and 2030."
Why This Company?: High Grades, Freshly Funded, Safe Jurisdiction
According to Pete Flindell, Goldshore Resources Vice President, Exploration, the company welcomes its new strategic partners, "as this commitment allows us to recalibrate the scope of the future project we want to take to feasibility study. We have a significant portion of high-grade mineralization in the shear zones (3.35Moz gold (Au) or 55% of the current mineral resource) with an average head grade of 1.84 grams per tonne (g/t) Au. This creates the opportunity for a hybrid process with a small flotation, regrind, and carbon in leach plant for the high-grade mineralization and a large heap leach operation for the low-grade material."
On November 15, 2022, the company announced 4.17 million ounces (Moz) (inferred) current global gold resource Mineral Resource Estimate (MRE) on November 15, 2022, as part of its 100K meter drilling campaign.
"The real story in this," CEO Richards explains, "is that the MRE also indicated a shear domain higher grade resource of 2.2Moz at 1.84 gpt, contained within the global resource. With 80,000 meters drilled to date, coupled with over 100,000 meters of historical drilling, the MRE conservatively modeled the low-grade material, and we think the forthcoming new MRE will increase a meaningful percentage of the current resource to Indicated category.
Why Now? Currently Grossly Undervalued
Richards lays out that "the global macro environment has never been better for owning gold equities in the past 25 years, and the future outlook provides an extremely compelling reason to own gold and gold equities now. Physical gold will deliver a reasonable return during this cycle, gold royalties will perform well and deliver a greater return than physical, but gold equities will deliver a multiple of any returns spot gold sees, given their starting point today. We are entering a period where wealth will be created with gold equities with large inventories in the ground."
"Gold equities have been significantly impaired in the past 12-24 months," he explains, "due to the strength of the U.S. dollar and the weakness of other global trading currencies (the Yen, the Euro, and the British Pound). Goldshore has also been significantly impacted by this dynamic and is off 85% from its IPO."
"Goldshore Resources is trading at US$3 per ounce of global resources, and its peers are trading from US$20 - US$75 per ounce. Goldshore also has a program in 2023 that is going to materially increase the global resource but also define a higher-grade starter project, which will allow the market multiple ways to value the company. Goldshore feels that these valuation metrics (when defined in 2023) will value the company above CA$200 million, while its current market cap is only CA$25 million."
Technical Analyst Clive Maund concurs with the company CEO's assessment, writing on May 4 that "We are starting to see a flight to gold (and silver) as contagion spreads across the banking sector with the line of Banks on the verge of going bust looking like an unemployment line in the early '30s. Gold is on the verge of breaking out to new highs, not just against the dollar but also against other currencies like the Canadian Dollar, the Euro, and the Swiss Franc. In individual stocks news, Goldshore Resources continues to soar."
Analyst Barry Allan of Laurentian Bank Securities wrote on December 30 of last year that "Goldshore continues to intersect mineralization laterally and at depth, significantly expanding the width and depth of previously defined mineralization as outlined in the 2013 grade model."
Ownership and Share Structure
Goldshore Resources has a Market cap of CA$25 million with some 205 million shares on offer, 7% of them as options. The company has also issued some 46 million broker warrants.
Company management, insiders, and board members own some 17 million shares or 11% of the company.
CEO and director Brett Allan Richards owns 3.26% of the company with 5.64 million shares, Chairman Galen Stuart Mcnamara owns 2.36% of the company with 4.09 million shares, director Victor Cantore owns 1.13% of the company with 1.96 million shares, Former Director Doug Ramshaw owns 0.90% of the company with 1.57 million shares, and director Shawn Khunkhun owns 0.52% of the company with 0.90 million shares.
Wesdome Gold Mines Ltd. owns 19.3% of the company with 38.42 million shares as a strategic investor.
According to Reuters, institutions own over 11% of the stock.
Sprott Asset Management LP owns 7.93% of the company with 13.72 million shares, Commodity Capital AG owns 1.65% of the company with 2.85 million shares, Palos Management Inc. owns 0.58% of the company with 1.00 million shares, and US Global Investors, Inc., owns 0.58% of the company with 1.00 million shares.
The company has some CA$1.2 million in the bank pre-financing, with a monthly burn rate of CA$0.2 million. All large institutions, management, directors, and insiders have participated in every fundraising round (CA$62 million since inception), and none are sellers.
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