Top-listed Getchell "The List"
Developers
Getchell Gold Corp. (GTCH:CSE) (CA$0.475 / US$0.365/share)
The base case for Getchell lies in their 2019 acquisition of the Fondaway Canyon asset where prior work confirmed the presence of 1,069,000 ounces of gold, comprised of 409,000 indicated and 660,000 inferred. The compelling case for investment is valuation, as the value-per-ounce of Getchell's market capitalization is vastly understated. Assuming that all options and warrants were to be exercised (injecting approximately USD$4.5 million in new working capital into the treasury), the fully diluted issued capital lies at 92,782,619 shares outstanding. Using the Aug. 31 closing price of US$0.365/share, Getchell is valued at US$33,865,655. Dividing that figure by the indicated and inferred resource of 1,069,000 ounces, one arrives at US$31.67 per ounce.
In 2017, with gold prices at around $1,250 per ounce, Cipher Research Report of Vancouver determined that an ounce "in the ground" was worth US$40, but recent comments by industry analysts have now declared a new valuation paradigm based upon the higher gold price. That valuation has a range of US$80/ounce to as high as US$250/ounce, with the differential being variable, like ease of extraction, jurisdictional risk and infrastructure.
Taking the lower end of the range at US$80, Getchell should be valued at US$85,520,000 or US$0.9218 per share, a 252% upside thrust from its recent price. One might argue that an open pit operation ("ease of extraction") located in Nevada ("jurisdictional risk" zero), with roads, water, power and educated labor force ("infrastructure") everywhere around them justifies a value-per-ounce closer to the higher end of the valuation range. At $250 per ounce, Getchell would be approaching US$3 per share.
That covers the minimum valuation projection for Getchell with no provision for a revised resource estimate nor exploration potential. The company is launching a 5,000-meter drill program into the Tenneco Drift, Pack Rat, Colorado and Pediment zones this month, into areas known to contain gold-bearing mineralization but never included in any resource calculations in the past. By example, drilling by Tenneco encountered up to 16-gram Au material over a half dozen holes and over decent widths, and while it was spectacular in grade, subsequent work programs excluded that zone. In the Pack Rat zone, 68 meters of 2.69 g/t Au (US$170/t rock) was reported but never included in any of the resource calculations. Needless to say, there exists significant potential for an increase in ounces through exploration.
Also noteworthy is the cut-off grade (COG) used to identify ore in the arrival at 1,069,000 ounces Au: a COG of 3.43 g/t Au was used back in 2017 (gold at $1,250), which most certainly would have excluded a substantial body of mineralization where grades were above 1 g/t but below 3.43 g/t. Most resource calculations in 2020 use a COG as low as 0.5 g/t Au, largely because the value of the ore is so much greater today at $2,000 Au than it was even three years ago.
It is my conservative estimate that after the discovery of new gold-bearing zones through exploration and the inclusion of known gold-bearing zones through the revised resource estimate (and lowered COG), Fondaway Canyon will boast a 2- to 3-million-ounce, NI-43-101-compliant resource. The lift in the stock price will come from a) rising gold prices, b) a revised value/ounce level, c) a larger resource from reranking (lower COG), and d) exploration success. The only one of the four valuation drivers that is speculative is d) exploration; the rest are predictable and quantifiable.
2020 target = US$0.92 / 2021 target = US$3.00