Timmins and Caballo Blanco
I am not a shareholder of Timmins but I own Goldgroup. I know more about Goldgroup than 99 percent of shareholders as I have studied this company for years. This also includes my knowledge of Caballo Blanco.
Some of you are wondering whether Caballo Blanco is a good acquisition for Timmins and why Goldgroup sold it.
First, Goldgroup sold it because the company owns another project (50 percent of it), San Jose de Gracia, which it wishes to develop and selling Caballo Blanco was a way to raise money in a difficult market. San Jose de Gracia is an extremely high grade project which could be developed in stages. Caballo cannot really be developed in stages the same way San Jose de Gracia can.
Second, is acquiring Caballo a good deal for Timmins? Caballo is all about the permit situation. Goldgroup has struggled for years to get it permitted. The number one reason was the governor of Veracruz. If you read articles about his reasoning, you will find all kind of stuff about environmental issues. Well, if you read articles about him (in spanish), you will find out a lot about money laundering, corruption, briefcases of cash, etc. You get the idea. This kind of individual does not care about environment so his reasoning are all just a front. So you should make up your own mind of why Caballo did not get a permit yet.
Now the interesting thing is that the governor of Veracruz will be out of the office on December 2016. He cannot run again. So all Timmins needs to do is sit on the property for 24 months and the situation will completely change. Once permitted Caballo Blanco is a hugely valuable asset. I wrote about it extensively. If you want, email me and I will send you all the stuff that I wrote about Goldgroup and you will learn about Caballo Blanco.
Caballo has 1 million ounces in the ground but it probably has more like 3 million and possibly 10 million. Read the 43-101 and you will know what I mean. If you believe that gold price will recover, then Caballo Blanco could be a billion dollar asset.
Dr. Paul Zweg: Nano Caps Offer Outsize Returns
“I’m going to give you the real crux: Goldgroup has 121M shares issued and outstanding and is currently trading for $1.64. That is a market cap of about $190M, but we bought in when it had about a $75M market cap. At that time, it was the largest company we bought for our portfolio. It has a wonderful management team that is driven by Keith Piggott and Gregg Sedun – experienced people, highly motivated, and smart. It has three principal projects, but I zeroed in on one in my research even though the other two are wonderful deposits. I focused on Caballo Blanco, which I think could be producing 100,000 ounces of gold annually in a little over a year at $200/oz. It will be able to do that because it is an outcropping ore body. It is all oxide. It will be a low-cost, heap-leach, run-of-mine operation.
But let’s say I am wrong and it produces at $500/oz. That creates a margin of $1,300/oz. If gold is getting $1,800/oz, multiply that by 100,000 ounces, then that creates $130M of EBITDA. Just that one project would support a $1.3B market cap. … I love this story.”
Obviously some things have changed since then like $500 per ounce cash costs, but you get the idea.
The bottom line is this - if Timmins can get it permitted, Caballo Blance will be a giant home run for Timmins.