A Revival in Gold: One Stock to Watch
Publisher's Note: Our gold recommendations around here are starting to take off in a big way. Some, like these here, have doubled or tripled over the past month.
As the gold price continues at seven-year highs, many companies are now being re-rated higher. Especially those with established resources — Tier 2 resources — in safe jurisdictions.
Revival Gold is one such company that Gerardo and I have been following for a while. I interview CEO Hugh Agro below to catch up on where it's been and where it's going... and why he saw a gold revival coming.
Call it like you see it,
President and Founder, Outsider Club
Nick Hodge: Hi, I'm Nick Hodge with the Outsider Club. I'm sitting down with Hugh Argo. He's the president and CEO of Revival Gold (TSX-V: RVG)(OTC: RVLGF). Revival Gold is no stranger to Outsider Club and the premium publications and to the members here. We financed it multiple times in Nick's Notebook. And I have followed it in Early Advantage as it has gone about exploring and developing the Beartrack-Arnett project in Idaho, which was a past producing asset.
Hugh, I want to jump right into it. Thanks for joining me again today. I know you and your family are well. We discussed that offline and so right to it, about the name Revival, and gosh, it couldn't be more appropriate. I know we questioned it for the past couple of years, but here we are with gold prices at seven-year highs in U.S. dollar terms. Revival near 52-week highs and seemingly a gold bull market underway. What say you about that?
Hugh Agro: Nick, you and your subscribers were on the ground floor when we got this business started three, almost four years ago and it really has been a revival. Couldn't have played out better than what you and we were hoping for and expecting in terms of the growth and enthusiasm for gold. Now at 10% of the index in the Toronto S&P index. Generalist investors can no longer ignore the sector and they're coming in waves. It really, truly is a revival. And the name Revival's not just about our belief in the importance of gold in the economy and to investors, but also the revival of a veteran gold team. The revival of the Beartrack-Arnett asset and the creation of a new growth company in gold.
Nick Hodge: So bring me up to speed on where you are now and then we'll talk about what's next. You've recently announced a PEA has commenced on the project. Let's quickly recap what's happened with the resource expansion over the past couple of years and now headed into some economics.
Hugh Agro: We started with nil in terms of resource. In May, 2018, we came out with a 2-million-ounce maiden resource. We've now increased that to 3 million ounces, as of February. And I think we can continue to grow that. Our internal expectations are for better than 5 million ounces at Beartrack Arnett. The project has a lot of scope to be increased in size. We're busy with plans to continue to do that. The team has executed well over the last three years and I expect we'll continue to execute well with the project at hand. In addition to the resource expansion, as you've said, we've now started a PEA process, preliminary economic assessment (PEA), underway on the first phase heap-leach restart project at Beartrack-Arnett. We'll have that study done by the end of this year. Engineers have been out to site and under Idaho's rules and regulations, we have mining and exploration carved out as an essential industry. So no slowdown in terms of COVID-19 for our PEA engineering work.
Nick Hodge: As you know, Hugh, I live here in Eastern Washington. I'm adjacent to the Idaho border and they opened up well before Spokane. Restaurants and salons have been open in Coeur d'Alene, et cetera for a couple of weeks now, so Idaho is definitely getting back to it. I want to pivot and talk about valuation and what's next a little bit because despite what I would call relatively good stock performance, equity performance, your valuation has lagged peers. And I'm just looking at some RBC numbers from last month saying that, with your measured, indicated, and inferred resources, you're trading somewhere around US$8 an ounce of enterprise value, right? Where your peer, the average is around twice that, US$19 an ounce.
And so I want to ask you about something you said recently about that. You were talking about your share price and valuation and what's next, saying that your shareholder base with Orion Mine Finance and a lot of other strategics are patient and they're not sellers. And so you were saying liquidity begets liquidity but you don't have that because you have what I would call "strong hands" in the market — not willing to sell and churn stock. I thought that was a good point. But then what you said next was one of the things you're undertaking to remedy that, and I want to get it right here so I want to quote you: "Others recognize the importance of those steps and those opportunities to add value, inorganically, by seeking out like-minded partners. So you can bet we've got a lot of work going on, on that front as well." What did you mean by that?