The KE Report Minera Alamos – Unpacking The Transformational Acquisition Of The Producing Pan Gold Mine and Gold Rock Development Project In Nevada
Jason Kosec, the new Chairman of Minera Alamos (TSX.V:MAI) (OTCQX:MAIFF), joins me to unpack the key takeaways from news announced on July 7th about their acquisition of Calibre USA Holdings Ltd from Equinox Gold Corp. for total consideration of US$115 million, subject to adjustment. Calibre USA holds a 100% economic interest in the producing Pan Gold Mine, development-stage Gold Rock Project, and exploration-stage Illipah Project in Nevada, USA.
We start off discussing how this is a truly transformational transaction for the Company, in that it brings in the producing Pan Gold Mine, doing about 35,000-40,000 ounces of gold production annually at the heap leach operations. This mine is generating strong cash flows given the current record gold price environment, and Jason outlines how these revenues can be used to organically grow and develop the other pipeline of low-capital intensity, quick-build, high-return, gold development projects like the past-producing Copperstone Mine in Arizona, the Cerro De Oro Project in Zacatecas, Mexico, the Gold Rock Project in Nevada, and the Fortuna Project in Mexico.
Jason also reiterates that this is not the company loosing interest or pivoting away from Mexico, but making an acquisition that brings in revenues and changes the valuation metrics while they await the permits in Mexico that the team still believes they will receive from the new administration.
- This transaction immediately strengthens their production profile, beyond just the residual leaching at the Santa operations.
- More importantly, bringing in a larger production profile should improve their valuation multiple with a likely rerating over time that is more in alignment with junior producing peers.
- Operating a solid production asset in Nevada will also lower their future cost of capital for advancing their other development assets, without as much equity dilution moving forward.
- There is also the benefit of minimizing future risk by diversifying their assets into one of the strongest jurisdictions there is in Nevada.
- We also discuss how the recent financing has attracted a much stronger institutional investor base that wants to see the pathway to multiple mines in multiple jurisdictions.
We go on to discuss the exploration upside both around the Pan Mine and at the Gold Rock Project, not to mention across their whole portfolio of projects. Now there will larger incoming revenues to truly intensify exploration efforts at multiple projects.
One can also see the pathway to future production growth and into a mid-tier producer with the Copperstone Mine slated to produce roughly 40,000 ounces of gold per year, and with both Cerro De Oro and Gold Rock each estimated to produce ~60,000 ounces of gold per year. After those 3 mines have ramped up to commercial production, alongside of the Pan Mine, then there is also the development-stage Fortuna Mine in Mexico that will move into position as mine number 5.
If you have any follow-up questions for Jason regarding Minera Alamos, then please email them into me at Shad@kereport.com.
- In full disclosure, Shad is a shareholder of Minera Alamos at the time of this recording.