A Junior Gold Miner that could be a 10 Bagger

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Time to look at a junior miner approaching production. Perhaps a 10 Bagger. The CymorFund Blog is a subscription service. Blogs about stock picks we add to our portfolio are available immediately only to Premium subscribers. All Subscribers have immediate access to the other categories of our Blogs, including Stock Picks that we have sold.

 

Treasury Metals Inc  (TML-TSXV)

In this period of difficulty for junior resource stocks, a few gems stand out with enormous potential. We judge this potential by their location, their access to capital, their conduct through the recent downturn, and their potential. Treasury Metals Inc meets all criteria.

 

Stock Chart

Treasury Metals
Treasury Metals

It’s bargain time. When someone offers you a bargain and the goods are so inexpensive, a logical person buys the bargain. Look at the chart from 2011 until today. The company is alive and kicking. The project has continually advanced. Four years of effort has been expended, and still the price falls. Others have felt the pain. Let’s take the reward.

 

What is Treasury Metals

We have followed Treasury for some time. Treasury Metals owns 100% of a gold bearing deposit in the safest jurisdiction in the world – Ontario, Canada. It has a 43-101; it has a mine plan; and it is just about ready to start producing gold, except for some details, such as raising a ton of capital to build the project.
 
We start with a quote from the company’s website – “Treasury Metals Inc.’s 100% owned Goliath Gold Project is slated to become one of Canada’s next producing gold mines. With first-rate infrastructure currently in place and Gold mineralization extending to surface, Treasury Metals plans on the initial development of an Open Pit Gold Mine to feed a 2,500 per day processing plant with subsequent Underground Operations in the latter years of the mine life.”
 

Toronto, Ontario–(Newsfile Corp. – March 3, 2014) – “We believe we will probably be the next gold project in Ontario to obtain mine permits,” says Martin Walter, President and CEO in an interview with SmallCapPower.com. He estimates the project will have all-in costs of $740 to $750 per ounce, and describes his company as being “fully funded” to complete a Feasibility and Environmental Impact Statement as well as an updated resource estimate later this year.”

Treasury Metals Inc. is a Toronto-based, TSXV-listed mining exploration and development company developing and permitting the Goliath Gold Project located in Northwestern Ontario. The Company’s flagship Goliath Gold Project is a high-grade gold resource that demonstrates strong market fundamentals, access to excellent infrastructure and a skilled local workforce. Treasury Metals has commenced the mine permitting process with the vision of a combination of an open pit and underground mining methods. Established in 2008, Treasury Metals operates corporate headquarters in Toronto and a project office at the Goliath Gold Project.

 

Some Highlights from the Company Website Presentation

The following is taken from the the company’s description of the project.

  • 100%-owned high-grade, flagship Goliath Gold Project demonstrating an indicated and inferred resource of 1.7 Moz
  • Results of 2013 drilling program have defined high-grade near-surface intersections, indicating significant upside potential for both resource and project economics
  • Low initial start-up CAPEX of $92M with cash-flows from initial 3 years of open-pit production funding underground development
  • Stable, mining-friendly jurisdiction of Northwestern Ontario
  • Strong leadership team with successful capital markets, mine and operations expertise

So what we have here is an advanced project, with a great deposit, in a great jurisdiction, with low capex (cost to bring the project into production), a company that has advanced the project continuously while other similar companies have floundered in the poor market conditions, and a company that insiders believe so strongly in that they keep using their own money to buy shares.

 

Insiders Keep Buying

A key criteria that we always consider, is whether insiders themselves believe in the story. If insiders are buying, it is something we notice. In the case of TML, the insiders just keep buying. That confidence is a very good sign. 
 
The following listing is only a partial record of insider’s transactions recently.
 
Mar 31/15 Yerly, Blaise F. – Acquisition in the public market 4,000 $0.325
Mar 31/15 Yerly, Blaise F. – Acquisition in the public market 1,500 $0.310
Feb 11/14 Henderson, Marc  Charles – Acquisition in the public market 25,000 $0.370
Feb 11/14 Henderson, Marc Charles – Acquisition in the public market 25,000 $0.340
Feb 11/14 Henderson, Marc Charles – Acquisition in the public market 25,000 $0.340
Feb 11/14 Henderson, Marc Charles  – Acquisition in the public market 50,000 $0.340
Feb 11/14 Henderson, Marc Charles – Acquisition in the public market 50,000 $0.340
Feb 4/14 Walter, Martin – Acquisition in the public market 100,000 $0.320
Feb 4/14 Yerly, Blaise  F. – Acquisition in the public market 250,000 $0.330
Jan 6/14 Henderson, Marc  Charles – Acquisition in the public market 50,000 $0.350
Dec 22/13 Walter, Martin – Acquisition under a prospectus exemption 100,000 $0.400
Dec 20/13 Ferron, Greg – Acquisition under a prospectus exemption 25,000 $0.400
 
If the INSIDERS are buying, perhaps one should notice. They are putting their own money on the line in a a belief in the company.
 

Current Status

In April 2015 the company announced that drilling continues to intersect High Grade Gold and Silver Mineralization at Goliath – the deposit keeps growing in size.
In April 2015 the company announced that the Goliath Gold Project moved to the Public Comment Period – the project keeps moving forward.
 
 

The Risk

There are substantial risks in this project. Although Goliath has advanced strongly, it still faces public scrutiny and permitting which could derail or delay the project. Another large risk is acquiring the necessary Capex. Although $92 million seems modest compared with other projects, failing to raise this capital could severely derail or postpone the project.

A project like this is not a done deal, until production starts and the kinks have been removed from the process – there are always kinks. There remains a lot of risk. On the other hand, finding an investment that has a realistic chance to become a 10 Bagger, is worthy of note.

 

Treasury Metals Inc (TML-TSXV)

We have added TML to our portfolio @ $0.32

 

 

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By Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele. He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section. He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm. Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.

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