Nevada gold/silver explorers are beginning to explode. One company that we mentioned before but never suggested and will never suggest is Blackrock Silver (TSXV: BRC), which gained as much as 51.35% last week to hit a new 52-week high on Friday of $0.56 per share where its market cap reached a high of $152.53 million.
The only thing we like about BRC is the fact that they have high-grade silver outside of Mexico and being on private ground means permitting is more straightforward with less regulatory agencies. The negatives are many, but our primary concern is their history of severe dilution.
Nobody is going to acquire BRC based on a PEA, but somebody will acquire Augusta Gold (TSX: G) at a massive premium based on its Reward Feasibility Study. A PEA takes a few weeks to complete vs. a Feasibility Study taking 2-3 years.
BRC only has inferred resources which wouldn't qualify for a Feasibility Study. For BRC to do all of the work necessary to upgrade their resources and then complete a Feasibility Study will take a total of 5-6 years. The amount of dilution required to get to that point will be severe. Even if the PEA numbers prove to be accurate in a Feasibility Study to be completed 5-6 years from now, BRC is already fully valued if you factor in future dilution.
BRC's Tonopah West is a standalone project and isn't surrounded by the largest Nevada gold discovery in 13 years like Augusta Gold (TSX: G).
As a standalone project, in 5-6 years after they upgrade their resources and complete a Feasibility Study, their total resource isn't large enough to attract one of the largest gold/silver miners.
BRC's Tonopah West isn't a low-risk heap leach project like Augusta Gold (TSX: G)'s fully permitted Reward and past producing Bullfrog Gold Projects. BRC has inconsistent nuggets of high-grade silver, which makes it a very high-risk project to develop.
If nobody acquires BRC, according to its PEA, the initial CAPEX to construct Tonopah West is already US$178 million. For BRC to develop Tonopah West on its own and enter production 10 years from now it will probably have at least 1-2 billion shares outstanding.
Our prediction is that Augusta Gold (TSX: G) gets bought out for 200%-300% above its current share price within months.
It is also worth researching Borealis Mining (TSXV: BOGO) which is fully permitted for production with all of the necessary infrastructure in place to support a heap leach gold mining operation, yet it also trades at a much lower market cap than BRC!
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. NIA's President has purchased 224,200 shares of G in the open market and intends to buy more shares. NIA has received compensation from BOGO of US$100,000 cash for a twelve-month marketing contract. This message is meant for informational and educational purposes only and does not provide investment advice.
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