Tocvan closed Friday at $0.415 on 134,000 shares. Overall, Tocvan had an active week with over 430,000 shares trading at an average price of $0.39.
There are many shareholders who have owned Tocvan since acquisition of Pilar in 2020, some participated in earlier capital raises, and some got swept up in a strong market in early 2021 when the price surged to the $1.60 level. Unfortunately, the entire market got caught up in the "Dreaded Covid Downturn". The price of Tocvan retreated and many activities were stalled. The price has been consolidating since 2023, trading up and down in about a $0.30 price range.
A large portion of stock has been absorbed by new shareholders as legacy and tired shareholders exit. I believe the value proposition has only become stronger, especially now with the surging price of gold. Since becoming CEO, Brodie Sutherland has managed expectations and brought in serious investors such as Sorbie, while keeping an eye on the share structure. Tocvan has an excellent share structure for a company at this advanced stage with only 51 million shares.
I also like the fundamentals from a financial standpoint. They have a long-term funding agreement in place with Sorbie ($62,500 per month), cash, and plenty of warrants and options to raise capital before going back to the markets. The capital structure also provides adequate room to raise more capital without excessive share dilution, especially if the share price moves higher. Most companies by the time they reach production have hundreds of millions of shares outstanding. If Brodie plays his cards right and the market conditions improve, I could see Tocvan reach production with a share structure that is significantly lower than the industry norm.
They also acquired a massive land package now combined known as Gran Pilar. Recent sampling has discovered numerous high-value targets, extensive underground workings, and attracted interest from a "Major" in the industry who has been conducting due diligence. Brodie believes Gran Pilar could contain a multi-million oz deposit.
Brodie put out a video earlier in the week outlining the progress to date and deliverables over the next two quarters (Q4 2024 and Q1 2025). Brief summary below.
1) potential open pit mining ban on new concessions in Mexico and as it relates to Tocan as a legacy and existing concession,
2) update on the release of recent surface sampling (476 samples),
3) restart of drilling in September weather permitting,
4) infill drilling and release of maiden resource estimate in Q4,
5) ongoing permitting and approval of a 50,000 ton Pilot plant in Q4 2023, and
6) start of "Proof-of-Concept" production and processing optimization in Q1 2025.
Here is a link to the video, it is well worth listening to.
Why have I been talking about the price of gold every week - the answer is pretty simple, I am excited. I started playing gold stocks over 50 years ago with my father when gold was worth about $40 USD an oz. If I had bought just 100 oz of gold and buried it, it would have cost me only $4,000 then, it would be worth over $250,000 USD today.
In contrast, I spent thousands of dollars on baseball cards, I still own them, but the return has been a fraction of what I could have made investing in gold. I do, however, proudly own an album of baseball team pictures, I loved the look of them when I was younger.
One thing I do know, if you live long enough you will experience several BEAR and BULL junior resource markets.
I am sure most will remember or have heard of the Bre-X scandal that shocked the world and was responsible for many of the reporting rules and regulations we have today. The markets were ripe for a "positive Story" after a 20-year depression in metal prices. Stoked by the Fear-of-Missing-Out (FOMO) speculators jumped on the bandwagon and drove Bre-X's stock price to astronomical highs, running from $0.20 to $280. The price came crashing down in 1997 when the head geologist Guzman mysteriously fell to his death from a helicopter on his way to meet the due diligence team investigating gold assays. It was found out that the cores were salted.
I was no longer living at home but I remember the day my dad called and said "SELL - the head geologist at Bre-X was just pushed out of a helicopter". My dad was always quick to react to headlines, in this case he was 100% correct.
The next major boom started in the early 2000's that coincided with cheaper commissions, the proliferation of automated trading platforms, and GREED. This fueled a financial crisis that came to a near-death experience starting with the "Great Depression" in 2007 when banks were unable to provide loans and consumers' spending decreased to a trickle as they rushed to pay off debt. This lasted well into 2009.
The last BULL market most will remember started shortly after this about 2011 and began to gain steam as the financial industry underwent an overhaul. This lasted through to about the end of 2015 and early 2016. The resource markets struggled after this time as most resource speculators exited and moved to the "SEXIER" side of the markets, for example, marijuana, Bitcoin, and AI (Artificial Intelligence), just to name a few.
The stock markets are now at record highs and the multiples that some of these stocks are trading at defy gravity. The markets don't seem to care. I am old school and believe the markets can't sustain this forever but what do I know, I have been proven wrong almost every week and month as the markets go higher and higher.
Then came Covid, which further impacted companies in a variety of ways. Inflation and interest rates also began to rise and it is only now, the fall of 2024, that inflation has been tamed and interest rates are beginning to fall.
Greed is a powerful stimulator, but the stock markets can also be a very humbling experience when you lose a lot of money. It is this humbling experience that trains people to reduce risk whenever possible and look for better undervalued stocks.
The price of gold surged on Friday with gold contracts closing at a record of $2,646, up $31, trading as high as $2,651. Clearly the market is betting that gold is going higher as precious metal futures contracts are where investors speculate the price of gold is heading. The physical price of Gold closed on Kitco at $2,619, up $34. The difference in price between the two is simply what one can get in the market today and what one is willing to pay in the future. It wasn't that long ago when the average price of gold broke above $1,000 (2010). Gold has since had a year-to-year performance of 13.8% and a staggering increase of 27.7% already this year.
My hypothesis is simple, the surging price of gold and commodities will rotate investment from Banks, financial advisors and speculators into the resource sector. This is the reason I continue to support Tocvan today. The potential profits and returns by investing early in an emerging gold producing company will be impossible to ignore and resist. This rotation of capital into the juniors will take time, but there will be High Net Worth individuals (HNW) placing bets long before the rest of the market. I believe this has started to happen now.
It is my belief that Tocvan is in a "SWEET spot" given the surging price of gold and the progress they have made to date, provided they achieve the milestones Brodie has outlined. There is a lot that can happen along the way to the "Candy Store", thus I suggest you conduct your own due diligence. I have been a shareholder since 2020 and have never received compensation in any form to promote Tocvan.
I have what my dad termed, "skin in the game".