In May 1992, Royal Gold (RGLD) was trading for only $0.094 per share with an enterprise value of USD$600,000. Four months later in September 1992, RGLD won a court settlement to successfully recover a sliding scale 2.5% to 5.5% NSR royalty interest from Cortez Gold Mines in the South Pipeline Deposit and exploded by 963.83% to $1 per share where it had an enterprise value of USD$8.97 million.
Two months later in November 1992, Cortez began an aggressive drilling campaign at the South Pipeline Deposit, causing RGLD to immediately gain another 100% to $2 per share where it had an enterprise value of USD$18.65 million!
Over the following six months, Cortez made several announcements that it had successfully intersected near-surface gold at the South Pipeline project, causing RGLD to gain another 137.5% to reach $4.75 per share in May 1993 where it had an enterprise value of USD$55.96 million.
Later that year in December 1993, Cortez announced that the South Pipeline Deposit contained an estimated gold resource of 4.2 million oz, which was 2.58X larger than the Cortez mine's total gold production over the previous 25 years from 1969 through 1993 of 1.63 million oz. Within 30 days of this announcement, RGLD exploded by 105.26% to reach $9.75 per share in January 1994 where it had an enterprise value of USD$114.56 million.
In March 1996, Cortez received approval from the Bureau of Land Management to commence development of the Pipeline deposit. Within 60 days, RGLD exploded by 62.87% to a May 1996 high of $15.88 per share where it had an enterprise value of USD$230.43 million. Production at the Pipeline deposit began in March 1997, causing the Cortez gold mine to achieve record gold production in 1997 of 407,000 oz. From 1998 through 2018, Cortez has produced a total of 21,402,000 oz of gold making it America's largest producing gold mine.
During the four year period of May 1992 through May 1996, RGLD saw its enterprise value rise by 38,305% from USD$600,000 up to USD$230.43 million solely due to its sliding scale 2.5% to 5.5% NSR royalty interest in the South Pipeline Deposit at the Cortez Gold Mine. Gold over this four year period only rose by 16.56% from $338 per oz up to $394 per oz.
Between May 1996 and April 2001, gold prices declined by 35.07% to a low of $255.80 per oz. By the time gold rallied back to $389.50 per oz in February 2003, RGLD had reached a new all-time high of $28.80 per share where it had an enterprise value of USD$560.44 million, which valued RGLD at 52.37X its 2002 net income of USD$10.7 million. RGLD reinvested its net income into dozens of gold royalties and streaming deals located all around the world and today it hit a new all-time high of $138.31 per share where it now has an enterprise value of $9.157 BILLION!
The Cortez Gold Mine is now owned by Nevada Gold Mines a joint venture between Barrick and Newmont. With the Pipeline deposit depleted, most of Cortez's current gold production comes from the Cortez Hills Deposit located 10 miles away from Pipeline. The low grade ore mined at Cortez Hills gets transported to the Pipeline Mill for processing by Nevada's largest overland conveyor.
To extend the life of the Cortez Mine, Nevada Gold Mines acquired the Robertson gold project from Coral Gold (TSXV: CLH) in mid-2017 with CLH retaining a sliding scale NSR royalty currently worth 1.5% but will be worth 2.25% after gold surpasses $2,000 per oz. Robertson is located directly adjacent to the Pipeline Mill, which means when Nevada Gold Mines brings Robertson into production, it will no longer need to use a 10 mile long conveyor belt!
CLH's Robertson Preliminary Economic Assessment completed in 2012 showed an inferred gold resource of 2,741,673 oz of gold. After conducting a large drilling campaign at Robertson in 2018, Barrick reported back to CLH, “Results from 2018 whole core assaying increased the grade thickness and highlights a previous under sampling trend.” With Barrick's 2018 drilling campaign confirming that CLH's past work at the property under-reported gold grades, NIA is almost 100% certain that Nevada Gold Mines will soon bring Robertson into production!
CLH already has $0.382 per share in cash from its Robertson sale and has a very low burn rate. At last week's closing price of $0.395 per share, CLH was trading with an enterprise value of only CAD$620,000, which was roughly the same as the enterprise value of RGLD in 1992 before it increased by 38,305% to USD$230.43 million in only four years!
Perhaps the best indicator that CLH will become the next RGLD is the fact that if Robertson isn't producing by year-end 2024, beginning on January 1, 2025 Nevada Gold Mines must pay CLH a large advance royalty of USD$500,000 or CAD$665,600 per year for up to 10 years until the mine enters production!
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 not a solicitation or recommendation to buy, sell, or hold securities. Never make investment decisions based on anything NIA says. This message is meant for informational and educational purposes only and does not provide investment advice.
Preparing Americans for Hyperinflation
