GoGold (GGD, TSX) Looks Good… Dare I Say, GREAT!

This TSX play has a little something in it for everybody – production upside from Parral plus economic discovery potential at Los Ricos.

During Q1 GoGold produced 424,210 Silver equivalent ounces, a new record, up 30% from the prior quarter. CEO Brad Langille, who’s been buying GGD in the open market recently (adding to his 10.7 million share position) stated, “Production increased each month during the quarter and the company expects that there will be continued improvement in the June 30, 2019 quarter.”

That’s an important statement.

GoGold needs to deliver as promised in Q2.  If they do, it’ll go a long way toward proving their Parral Tailings Project is a viable operation.  Problems pertaining to leaching and recoveries have been dogging GoGold for years.  They need to prove they can make money and ramp up production.  An estimated 45 million ounces of Silver equivalent reserves and resources are sitting there, waiting to be recovered.  That’s more than a decade of production at +2 million ounces per year.  So imagine how attractive/valuable Parral would be in an environment where Silver is again worth $20 or more per ounce.

Quality mining companies with exploration upside can trade at multiples of 4 x sales, sometimes even better (especially when precious metals prices are rising). Therefore, in theory, GoGold could be worth $200 million assuming 2 million ounces annual production and $25 Silver.

Right now GoGold has a market cap of $54 million.

But the following chart suggests it’ll be worth more than $54 million very soon.

GGD is gradually moving up.  It finished the week at 34 cents after a 13% gain Friday.

Here’s Why:  Mr. Market has yet to fully account for Los Ricos, a high quality exploration project (featuring pockets of past production) Langille had been wanting to buy for years.  GoGold finally got the deal done last month.  Since the,  they’ve pumped 2 great press releases into the market. 17.7 g/t AuEq over 7.2 m, and 5 g/t AuEq over 35 m!  High-grade results that exceeded Langille’s expectations. Right now the exploration team is busy defining the extension of the mineralization along strike southeast of the old workings towards the prospect known as Cerro Colorado.  Those results are expected to be released in short order, according to Langille.