Gold is up by $15.90 today to a new 10-month high of $1,341.86 per oz! Gold stocks are exploding and NIA predicts that Fiore Gold (TSXV: F) will become the #1 largest percentage gainer on the TSX Venture exchange in 2019. Currently, Fiore is up by $0.025 or 7.7% today to $0.35 per share, but this is NOTHING... the last time gold was trading at these prices 10 months ago... Fiore Gold was trading for $0.62 per share or 77.14% above its current share price!
Fiore Gold has only 97,716,128 million shares outstanding for a current market cap at $0.35 per share of only CAD$34.2 million or USD$25.81 million when the company has a cash position of US$6.167 million, with zero debt, and total working capital of US$18.123 million. Fiore's official enterprise value at $0.35 per share is only US$19.64 million! Including inventories of ore already mined and sitting on the leach pads, Fiore's real enterprise value (based on working capital) is truly only US$7.69 million!
This means Fiore's business is currently being valued for less than 1X its 2018 mine operating income of US$12.77 million! With a measured/indicated gold resource of 670,700 oz, Fiore at $0.35 per share is being valued at a shockingly low $11.47 per oz of measured/indicated gold!
Fiore's closest publicly traded comparison is Pershing Gold (PGLC), an open pit gold explorer located nearby in Nevada with a total measured/indicated resource of 789,000 oz. PGLC has similar grades to Fiore and is currently trading at a valuation of US$42.77 million or $54.21 per oz of measured/indicated gold, when PGLC is still years away from production and will need to raise at least US$53.2 million to develop its mine, which will severely dilute shareholders.
Fiore Gold is years ahead of PGLC. Fiore's Pan mine was developed at a cost of US$200 million and after producing a record 34,297 oz of gold in 2018 - generating revenue in 2018 of US$44.381 million - Fiore's 2019 gold production is likely to exceed 40,000 oz and could even reach 50,000 oz! Based on gold's current price of $1,341.86 per oz, Fiore is likely to generate revenue in 2019 of between $53.67 million and $67.09 million.
Fiore shocked the world by successfully reducing its all-in sustaining costs (AISC) last quarter to a new all-time low of $893 per oz. Although Fiore in our opinion is likely to further reduce costs in 2019, if we conservatively estimate that Fiore averages AISC of $893 per oz throughout 2019, Fiore is likely to earn mine operating income this year of between $17.95 million and $22.44 million.
Most gold miners we follow are currently trading with enterprise values of approximately 5X mine operating income. Once gold surpasses its key breakout point of $1,375 per oz, we expect most gold miners to begin trading at higher multiples of approximately 10X mine operating income.
Using the most conservative figures possible, if Fiore Gold only earns US$17.95 million in mine operating income in 2019 and trades at a low enterprise value multiple of only 5X mine operating income, Fiore will reach an enterprise value of US$89.75 million for a market cap of US$95.92 million or CAD$127.09 million - valuing Fiore Gold shares on the TSX Venture exchange at $1.30 for a gain of 271.43% from its current price of $0.35!
If Fiore Gold is able to reach 2019 mine operating income of US$22.44 million while gold stocks simultaneously become hot again, allowing Fiore to trade at a higher multiple of 10X mine operating income - Fiore will reach an enterprise value of US$224.4 million for a market cap of US$230.57 million or CAD$305.5 million - valuing Fiore Gold shares on the TSX Venture exchange at $3.13 for a gain of 794.29% from its current price of $0.35!
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.