Thread by @BULLReturns

$GMTN heading towards negative EV

1m oz resource at high grade with positive drilling results

65koz low capex production ramp up, NPV 10x cap and expanding

Optimization issues on start up

Accummulation zone incoming 8-18c, below <12c 10x return potential

#goldstocks

It's starting to tick the boxes
A) negative EV
B) free pounds in the ground
C) low capex ramp up
D) nice grade
E) 10x plus NPV upside
F) hated by the market
G) optimization could kick in 3-6 months time
H) cycle bottoming incoming over 4-9 months
I) low dilution risk Vs M&A

Please note any new bottoming theme over the next 3 to 9 months, one should have 5 candidates to mitigate stock specific risk.

If our #gold watchlist falls by 50% from here as the bottoming process kicks in, the average return will likely be 10-15x over the following 3-5 years.

Our #goldstock selection list is adding unique sub US$20m caps (negative EV is a bonus) with over US$200m defined upside via NPV achievement and continuous reserve expansion, low capex mitigates high dilution, as does healthy cash balances. Higher grade hopefully higher margins.

On the macro #gold front:

Likely worst case scenario:$1100-1200 (marginal cost) Gold if USD was to strengthen +17-25%, gold stocks would fall 50-65%

A more likely outcome:
$1400-1500 assuming 7-12% increase in the USD through 1H 2023 as markets bottom;
Or
$1500-1600 = 3-5%

The secret sauce to locating the next set of incoming 10 baggers plus over 5 years in #cyclical #commodities:

Cap < 5% NPV
IRRs > 100%
Capex < 10% of NPV
Capex < 50% of Cap
Scalability of Resource>200%
Scalability of Production>200%
Healthy net cash position avoiding dilution

Examples of short term mispricing Vs medium term upside:

A) Negative EV and trading <0.5x CF < 3yrs out = potential 10x upside (based on average spot cycle assumptions)

B) PE 3x (lower end cycle commodity price assumptions) with capacity growth of 200% within 3yrs = 7-10x