After NIA suggested Rusoro Mining (TSXV: RML) at $0.05 per share many people kept asking us, "What About Gold Reserve (TSXV: GRZ), What About Gold Reserve (TSXV: GRZ)."
First of all, we had been following the situation in Venezuela including both stocks RML and GRZ since at least 2016.
We knew GRZ had a stronger balance sheet, and it was being aggressively accumulated by a large hedge fund, but their stronger balance sheet would only enable them to survive a long-term situation where the Citgo auction wasn't allowed to proceed until many years later. We suggested RML when we did in March 2022 because we saw the situation between the U.S. and Venezuela being shaken up where we believed there were signs that the auction would be allowed to proceed relatively soon.
We knew RML had a much lower market cap than GRZ, a much larger judgment than GRZ, and most importantly RML won their judgment earlier and would have priority over GRZ.
Yesterday, it was announced that an affiliate of Elliot called Amber Energy won the auction for Citgo where they will pay $7.29 billion for Citgo, but the bid is conditional on the judge not accepting the PDVSA’s $3.367 billion in 2020 bonds. If the judge doesn't accept these bonds and Amber Energy successfully acquires Citgo for $7.29 billion, RML will definitely collect on its $1.76 billion assuming the U.S. Treasury signs off on the final sale.
If the judge accepts the PDVSA’s $3.367 billion in 2020 bonds, there is a 75% chance that RML will end up collecting its money anyway after Amber adjusts its bid, but GRZ will definitely not collect its money.
RML declined by 6.11% on Friday to $1.23 per share and remains up by 2,360% from NIA's suggestion price.
GRZ which we never suggested declined by 42.15% on Friday.
We stand by our comments this summer that RML is one of the only TSX Venture stocks being priced appropriately and the market is functioning properly.
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is meant for informational and educational purposes only and does not provide investment advice.