Touchstone Gold "Shares" Tip, February 2013 "Shares" magazine tipped Touchstone Gold barely eight months ago (14th. February 2013) at over four times its current price LSE price of 2p (8.38p):
"Touchstone ready to drill larger ground
The highly prospective miner is now back at work
Drill results are highly technical announcements and can alienate investors who lack a basic understanding of mining terminology. Do not ignore such statements. These nuggets of information can contain vital clues as to a miner’s true potential. They provide guidance on the quality and quantity of a mineralised deposit and give details upon which analysts can build valuation models.
Colombia-based Touchstone Gold (TGL:AIM) is responsible for some of the best exploration results Shares has seen among Aim stocks. It now looks primed as a recovery play having been sold down in 2012 as investors grew impatient over a lack of exploration activity. The stock took a further hit at the start of 2013 when a lock-up expired on Touchstone stock used to pay for last year’s merger with Atlantis Gold. This triggered a new wave of selling by former Atlantis investors.
We believe the worst has now passed for four reasons. First, Touchstone has completed its lengthy efforts to consolidate ground around its Rio Pescado prospect. Second, it has raised C$5.5 million cash in December 2012 to fund exploration work. Third, the company promises to better communicate the story – something it has previously been guilty of neglecting. Finally, Touchstone has recommenced drilling after nearly a year’s absence. House broker Canaccord Genuity has a 40p price target.
Driller thriller
Since joining Aim in June 2011, Touchstone has published a string of high-quality drill results including 28.2 metres at 8.7 grams per tonne of gold; and 15 metres at 9.1 grams per tonne of gold. The results show mineralisation at shallow depth, implying Rio Pescado could be a high-grade, open pit mine.
The small cap stopped drilling in March 2012 when it approached the licence area boundary. It had a hunch the mineralisation continued south but did not want to drill right to the edge as the results may have enticed its neighbour, $11 billion cap Yamana Gold (YAU), to command more money for its licence area. Touchstone bought the property, called El Cinco, in October 2012 for C$1 million. Yamana has subsequently become a 2% shareholder, having been paid in shares for its 60% position in El Cinco. The remaining 40% is held by a private party which will have to contribute its share of exploration expenditure.
Touchstone’s merger with Atlantis brought land that wrapped around Rio Pescado and El Cinco. The miner has subsequently increased its land holding by 500%, to 24,699 hectares, in a highly-prospective part of Columbia and renamed the wider project as Segovia.
Drilling will recommence this quarter with a view to publishing a maiden resource statement between July and September.
If we assume Touchstone achieves one million ounces at its maiden resource, as had been expected last year before the delays, and use a crude $35 per ounce valuation historically placed on the lowest category of resource ounces by analysts, that would imply a $35 million (£22 million) market valuation. Although this is only 25% higher than its market cap at the time of writing, there is significant exploration upside since only 5% of the property has been drilled to date. Touchstone believes Segovia could eventually become a multi-million ounce gold deposit which implies multiple gains on its market valuation. When it comes to raising the funds to build a mine, Touchstone is well connected. Its chairman is Bob Buchan who previously ran $9.1 billion cap Kinross Gold (KGC:NYSE) between 1993 and 2005.
Touchstone Gold
(TGL:AIM) 8.38p BUY
Stop loss: 6.7p
SHARES SUMMARY
• High-quality exploration results
• High-profile chairman
• Near-term catalysts
Sector: Mining
Sub-sector: Gold Mining
VITAL STATS
Market value: £17.6 million
Prospective Dec 2013: n/a
Prospective Dec 2014: n/a
1-month relative strength: -8.9%
1-year relative strength: -60.4%
Prospective dividend yield: n/a
Bid/offer spread: 2.9%
Issue Date: 14 Feb 2013
Page: 8
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https://www.sharesmagazine.co.uk/articles/touchstone-ready-to-drill-larger-ground