What if I told you that you can buy an advanced stage gold explorer/developer that has a development plan for up to 350,000 ounces per year of gold production that is in the permitting stage for less than $0.10 on the dollar?
That is exactly the current situation with KORE Mining (TSX-V:KORE, OTCQX: KOREF) and its two PEA stage gold projects in California. KORE’s Imperial and Long Valley Projects have a combined NVP(5%) of C$1.019 billion using a US$1,600/oz gold price. KORE’s current market cap at a C$1.00 share price is C$106 million. This means that not only are investors able to buy Long Valley and Imperial at less than $0.10 on the dollar, but they are also getting a more than $100/ounce discount to the current gold price. And this doesn’t consider any exploration upside value for KORE’s ounces of gold in the ground, currently being valued at US$22 per ounce, while the market averages around US$60 per ounce in the ground.
This is an incredible deep value opportunity that helps to illustrate a couple of things:
How out of favor the gold sector is currently, despite the fact that gold is above US$1,700 an ounce.
How much investors dislike the feasibility/permitting stages of the mining life cycle.
The Lassonde Curve tells us that the development stage is the “orphan stage” of the mining life cycle:
Simply putting an “orphan period” label on KORE would be missing some key events that aim to drive additional shareholder value in the near term. In addition, Long Valley and Imperial are relatively simple heap leach projects that have low capital intensity, and also do not require a long construction timeline.
Let’s dig into this deep value opportunity available today in KORE shares.
Imperial would be considered KORE’s flagship project due to its higher IRR, NPV, and faster permitting timeline. Imperial is a rare, simple oxide gold project located in Imperial County, California. Imperial County has a long history of mining so the infrastructure and skills are there, and also it happens to be the poorest county in California with a ~15% unemployment rate so the development of Imperial is really important for the surrounding communities.
Imperial hosts a 2.2 million ounce 100% oxide resource (900,000 ounces indicated grading 0.59 g/t gold, 1.2 million ounces inferred grading 0.46 g/t gold). Imperial has a cohesive ore body that is perfect for an open pit method of mining, and metallurgy is straightforward.
According to a 2020 PEA, KORE’s Imperial Project has a C$643 million NPV(5%) using a US$1,600 gold price. Perhaps most importantly, there is tremendous potential for new discoveries to expand the current resource base at Imperial. KORE controls the 28 square kilometer Mesquite-Imperial-Picacho District that has never been systematically explored with modern methods.
In December 2020, KORE put out a news release announcing the discovery of gold in dry stream beds located between Imperial and Equinox Gold’s Mesquite Mine. Imperial is located nine miles southeast of the operating Mesquite mine (owned by Equinox Gold (TSX: EQX), and there is 19 kilometers of structural strike that is wide open for new discoveries.
The discovery of gold in dry stream beds between Imperial and Mesquite enhances the thesis that fault structures from Mesquite to Imperial have potential to host multiple gold discoveries similar in scale to Mesquite and at Imperial.
Geophysical interpretation previously identified three high priority target areas including Mesquite East, Ogilby, and Imperial East. Each of which has the potential to host a new gold deposit. With over 160 drill pads being permitted, drilling, which is expected to start in 2H 2021, will take years to fully explore.
KORE’s CEO Scott Trebilcock stated: “We are extremely encouraged to discover stream bed gold occurrences which align with our geophysical model on our Mesquite-Imperial exploration area. The discoveries support our thesis that there are multiple new near surface gold deposits to be discovered. KORE’s job now is to find the source or sources of the gold by targeting the 19 kilometers of fault structures interpreted earlier this year. While the Imperial County has over 140 years of gold mining history, the Mesquite-Imperial-Picacho District and the Imperial gold project could extend that history for many future generations with new gold discoveries and provide much needed employment and economic development.”
KORE has a clear plan of action at Imperial with a target for mine operations commencing in 2025.
Turning to KORE’s 100% owned Long Valley Project. Long Valley is a large epithermal gold deposit with extensive drilling of the shallow oxides. The recent PEA demonstrates Long Valley has the potential to be a simple, high recovery heap leach gold mine with strong project economics.
The Long Valley PEA demonstrated a 48% after-tax IRR using a US$1,600/oz gold price in a simple low capital, open-pit heap leach operation. KORE is exploring the project to further expand the oxide resource and test potential for high-grade sulphide targets at depth.
KORE should begin drilling at Long Valley mid to late Q2, before drilling begins at Imperial. KORE will be targeting multiple sulphide feeder structures over 10 kilometers of strike length. The Long Valley deposit that is outlined in the PEA averages 60 meters depth, which means there is substantial room for expansion into sulphide feeder systems at depth.
The way I view the KORE investment proposition today is as follows:
● The exploration targets at Imperial and Long Valley by themselves could easily support a C$100 million market cap.
● The Imperial and Long Valley PEAs demonstrate roughly C$1 billion of economic value using a US$1,600/oz gold price. The fact that gold is actually $150+ above the price used in the PEAs, AND the fact the market is valuing KORE at ~10% of its after-tax NPV(5%) means that KORE shares offer a deep value proposition.
If we combine the deep discount implied by KORE’s current market cap relative to its nearly 4 million ounces of gold resources at Imperial/Long Valley WITH substantial district scale exploration potential at both projects, suddenly we have an incredible investment proposition.
It is no wonder that insiders own 38% of KORE’s issued & outstanding shares. Billionaire precious metals investor Eric Sprott holds another 26%, resulting in a tight trading float of less than 40 million shares.
KORE also boasts a deep, experienced management team with a track record of success.
KORE is led by CEO Scott Trebilcock. Mr. Trebilcock has over 25 years of experience as a process engineer, management consultant, and mining executive. Most recently he was Chief Development Officer of Nevsun Resources, responsible for strategy, corporate development, investor relations and exploration. Nevsun sold to Zijin Mining for $1.9 billion after a year-long contested defense process led by Mr. Trebilcock. Mr. Trebilcock also drove M&A at Nevsun, including the 2016 acquisition of Reservoir Minerals, and led Nevsun’s investor relations program for almost a decade. Mr. Trebilcock holds a B.Sc. in Chemical Engineering, an MBA from Queen’s University and is a Chartered Director.
Another key member of the KORE team is COO Marc Leduc. Mr. Leduc is a mining engineer and geologist with over 30 years-experience covering all aspects of the development, operation, planning and evaluation of mining projects, with expertise in designing, constructing and operating large heap leach gold mines. Notably, Mr. Leduc has extensive experience in permitting and developing gold projects in California. He was COO and then CEO of NewCastle Gold Ltd. (gold heap leach project in California) – the latest gold mine into production in California, CEO of Luna Gold Corp. (gold milling project in Brazil), Chief Operating Officer at Lydian International Limited (gold heap leach project in Armenia) and President and COO of Bear Creek Mining Corporation (both silver/gold heap leach project and a polymetallic project in Peru).
KORE is a unique deep value investment opportunity in the gold sector. Not only does the company have strong fundamentals underpinned by roughly 4,000,000 ounces of gold resources in a safe/stable jurisdiction (California), but the company also has highly prospective exploration opportunities with significant potential for new discoveries. The management team is strong, and they have a lot of skin in the game.
The technical chart setup is also attractive:
KORE shares are deeply oversold with evidence of ‘selling exhaustion’; bullish RSI divergence, MACD bull cross, and volume drying up. $0.80 is strong support (~15% below current levels, and there is 30%+ of near term upside potential back to previous support/resistance near $1.30).
I have been accumulating KORE shares in recent days as I view a C$1.00 KORE share price to be a highly attractive deep value opportunity.
Lastly and for fun, KORE is giving away an ounce of gold to the person who gives them the best idea for a new tag line that captures the spirit of KORE Mining. Get involved! You can enter here: https://kincommunications.com/kore-mining-gold-giveaway/
Disclosure: Author owns KORE.V shares at the time of publishing and may choose to buy or sell at any time without notice.
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Kore Mining Ltd. is a high-risk venture stock and not suitable for most investors. Consult Kore Mining Ltd.’s SEDAR profiles for important risk disclosures.
EnergyandGold has been compensated to cover Kore Mining Ltd. and so some information may be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
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