Atrium's Report - Valuation and "Bible of Assumptions" It has been a quiet week for Tocvan on the news front but rather active from a trading perspective. Tocvan closed Friday at $0.495 on 17,100 shares, up from $0.40 the previous week. The price trend is certainly in the right direction with 409,000 shares trading for the entire week. I felt it was another very good cleanup of loose stock.
I was particularly encouraged by the larger share purchases, such as RBC who bought 222,000 shares from Anonymous. Red Cloud also continues to increase their position and support the price in a controlled manner. Anonymous sold over 320,000 shares this week, I have said this before, at some point they are going to run out of stock.
I am anxiously waiting for the results from 476 samples. As stated by Brodie in an interview from the previous week, these results will form the basis for decisions regarding upcoming drilling programs. The discovery of numerous artisanal underground workings during this field program suggests Gran Pilar has a similar surface mineralization model that has already been proven at Pilar. I am hoping we might see a clustering of samples collected from not one, but several intensely mineralized areas, suggesting a larger open pit mining footprint than previously thought.
I am also anxiously waiting for drilling to start. The hurricane season has picked up as evidenced with the rapid formation of Helene and two more named cyclones in the Atlantic, Isaac and Joyce, as well another one potentially forming off the coast of Africa. Helene was a very destructive hurricane that travelled into the Gulf of Mexico and away from mainland Mexico. There are no hurricanes expected to cross the mainland of Mexico. Historically, Sonora is near the end of their rainy season, thus I expect drilling to commence shortly after the release of field results.
The highlight this week was a report produced by Atrium Research, titled "Tocvan Ventures - Strong Assets with a Near Term Path to Production". It is a good perspective of the past progress, present catalysts, and future plans. Here is a link to Atrium's website and access to the Tocvan report. https://www.atriumresearch.ca/
I reviewed their website and other similar reports they have prepared. Atrium is a contract research company who bases their report on only public information. They have prepared reports for 17 companies. Their coverage for Tocvan is initially six months, which should give plenty of time to evaluate their assumption model and the progress of Tocvan. Since there are still many unknowns, they have taken a very pragmatic and conservative approach by using an 80% discount for a company at this stage.
I recommend that you conduct due diligence as to the validity of the assumptions and predictions made in their report and draw your own conclusions. There is a lot to unpack in this report, it is detailed, well written, and if you look carefully, there are nuggets of gold scattered throughout.
I believe this report is very conservative and doesn't take into account any "Blue Sky" potential that exists in Gran Pilar. However, it does put a stake in the ground by bringing forth a set of assumptions regarding initial resource estimates, timing of the pilot plant, time to full production, and developing a valuation model using Net Present Value (NPV).
I think this statement from the report pretty well sums up their investment thesis.
"The current priority is bringing the Gran Pilar Project into production, by way of an upcoming maiden resource estimate, followed by the permitting and construction of a 50,000 ton pilot plant" and further, "The upcoming 12 months are set to be transformational for TOC, as the Company aims to release its first-ever resource estimate at the Gran Pilar project, secure permits, and begin the construction of a pilot plant, with initial cash flows anticipated next year".
I am not going to attempt to discuss their assumptions here, as there are simply too many. However, I will say it is very detailed and provides excellent context to understanding the future potential of Tocvan. You will find everything from an assumption of the Maiden resource estimate (250-500 K oz) to the cost to build and operate the pilot plant ($1.7 M USD).
You might want to use Atrium's detailed report as the "Bible of Assumptions" from which to measure progress. The rubber is about to hit the road. The execution of Tocvan's next steps are critical to becoming a major producer in the area, therefore the near term catalysts to keep an eye on are the following.
1) Main zone Diamond & RC Exploration Drill Results – Q4/24,
2) New target RC Drill Program – Q4/24 – Q1/25,
3) Pilot Plant permit approval & construction decision – Q1/25,
4) Maiden Resource estimate Q4/24 - Q1/25 depending on when drilling starts, and
5) Funding to build and operate the pilot plant ($1.7 M USD)
Atrium's report aligns perfectly with my understanding of how Tocvan will proceed over the next several months. There is a lot to learn over this time period, and I believe that this conservative valuation will prove to be a good base from which to project Tocvan's future price.
The "Blue Sky" potential of Gran Pilar to hold a multi-million oz discovery is what keeps me engaged with this investment. Whether or not a "Major" gets involved is yet to be determined but their due diligence to date has certainly sharpened my pencil as to what the future price of Toccan might be.
As my dad said, "keep focussed on the progress and data, it will support or refute the underlying assumptions, and eventually provide a guess as to the future share price".
One thing my dad never envisioned was the rapid rise in gold price and how this will ultimately impact a stock's price. As I have said, if gold continues to rise, Tocvan will potentially be in the "Sweet Spot".
I was having coffee with a couple of friends who I have talked about stocks with for decades, I loved this comment from one of them, "We are at the start of something beautiful". He is a smart person that has been right far too many times to count.