NIce trend to see more volume and new buyers. The volume during the later part of last week suggests that progress is being made with the bulk sample, and as resources are freed up, I expect drilling to begin at both Pilar and El Picacho in the near future. Drilling at Pilar is of particular interest and importance as infill drilling will lead to the calculation of a maiden resource estimate. Tocvan closed at $0.59 on Friday with a big volume day in excess of 169,00 shares, on Thursday Tocvan traded over 95,000 shares, a total of 450,000 shares for the week, which is clearly a significant uptick in trading over the last several weeks.
The recent video from PDAC by Tocvan is a great overview of the steps moving forward, and a good summary of the historical mining in Sonora and Public companies operating in the area, such as SilverCrest. There are also many private companies who are lesser known but are very interested in what Tocvan is doing both at Pilar and El Picacho. There has been extensive work on both properties in the past as evidenced by artisanal underground workings, so locals are well aware of the potential.
The takeaway message, there is gold starting at the surface that runs at depth, and with the completion of preliminary tests such as bottle roll results in 2021 (recoveries in excess of 91%) and column leach studies in 2022 ( recoveries ranging from 88.9% to 96.9%), these data suggests Pilar is well underway to becoming either one of the next producers in Sonora or being acquired. Many companies never reach this goal resulting in volatile trading driven by speculators and day traders that eventually result in drastic share consolidations and cheap dilutive financings (we have all been caught in a few of these if you invest in junior resource stocks). I would suggest keeping an eye on Tocvan to see how they perform if you aren't already convinced to invest. I am a declared shareholder and have not received any compensation from the company or any other person connected with the company. Conduct your own due diligence before making an investment decision.
Here is a link to the video.... https://www.youtube.com/watch?v=mAUyyIDbxfM
The business model is pretty straight forward for both private and Public companies operating throughout Sonora Mexico, they are constantly on the lookout for new properties that have the potential for near-term production to replace their older operating mines that are near the end of life. Pilar is a great example of an advanced property with over 23,000 m of drilling, at surface mineralization, and excellent gold penetrating at depth.Tocvan is lucky in that there is a private group who are getting involved located with the infrastructure to conduct the heap leach test who are only about 50 miles away. This relationship will provide for better economics moving forward, thus better use of their cash. They will extract a 1,000 ton bulk sample, which is about 50 trucks, transport to their site and manage the heap-leach operation.
The heap-leach operation is pretty simple, first the rock is crushed to increase surface area and expose gold and silver, then placed on an impermeable liner and constantly washed with cyanide to dissolve gold and silver into solution, collected, and extracted through a carbon filter system. The goal of this exercise is to understand the head grade concentrations and ultimately the recovery rate which is a critical step in bringing Pilar to production. It is important to note that many companies have proven the viability of this process in Sonora, and combined with easy Government permitting, Tocvan is in a sweet spot to make this happen in a reasonable time frame, which as an investor, lowers my level of risk.
Tocvan is nicely capitalized having just raised over $600,000 from key investors and existing shareholders (I participated), and over $5 M through a family institutional investor who is aligned with the growth of Tocvan through a non-debt facility by releasing money on a monthly basis well into June of 2024. This long-term financing means Tocvan isn't pressured to raise capital but rather concentrate on building property value. Tocvan is in an enviable position that not many companies enjoy as they can raise more capital at higher pricing with less dilution (last Private Placement at $0.52). As a shareholder, the few outstanding shares generally means higher pricing and better control of their trading market and shareholder base, as evidenced by the low daily share volumes during quiet periods.
Tocvan is a well managed company as shown by their use of capital over the last 3 years and their ability to keep the share structure exceptionally tight with only about 38 M shares outstanding (note: warrants are constantly exercised to provide capital indicating a strong shareholder base). They have two great properties, Pilar and El Picacho, which provide a backstop to the current share price. Management is singularly focussed on their two properties in Sonora, and are in the process of spinning out Cascade Copper to give existing shareholders an additional asset.
Overall, I am excited to see the progress of Tocvan over the next several months, during which time there should be a good flow of information. As interest rates rise, and inflation remains high, I expect gold prices to improve significantly over the next few years. Right now investors are chasing Lithium stocks, but as we all know, history generally repeats itself with gold and silver becoming an important asset in distressed capital markets.
My dad always said, "stocks with conservative management and great properties will hold value and eventually be embraced by a broader shareholder following". One has to look no further than companies who make it to production, trading volumes and share prices generally rise to reflect this value as new shareholders get involved at higher prices. Further, Tocvan has been aggressively engaging the media over the last several months, essentially laying the groundwork and broadening their potential investor following. It is all about timing, trust, and a little bit of luck.