Brien Lundin on Gainey Capital (TSX-V: GNC)
Precious metals exploration with a ready-made source of cash flow. That’s the idea behind Gainey Capital.
El Colomo, Gainey’s flagship project, is located in Nayarit State, Mexico, along that country’s Golden Corridor. An 18,776-hectare gold-silver project, El Colomo has the potential to be supported by a 300-tonne-per-day mill that has the capacity to expand to 600 tonnes per day.
That’s key, because there are a number of private miners near the processing plant in Huajicori that could provide the mill with ore (and, thus, cash flow). And with the gold and silver markets stabilizing, there’s likely to be demand for Gainey’s services.
The company will use that money to explore El Colomo’s 21 known mineralized zones. Right now, a Phase 1 drilling program is wrapping up on the La Higuerita and La Nueva Victoria targets.
Highlights from assays released in 2016 from La Nueva Victoria include Hole 1 (70.85 meters of 0.65 g/t gold and 35.35 g/t silver), Hole 2 (72.2 meters of 0.41 g/t gold and 20.21 g/t silver) and Hole 3 (34.2 meters of 1.19 g/t gold and 86.57 g/t silver). All three holes encountered mineralization near surface.
Assays are at the lab for the La Higuerita target and should provide the company with more news flow in the coming weeks. The company is also actively developing current prospects and identifying other drilling targets on El Colomo.
As Phase 1 at El Colomo winds down, management is in the process of selecting targets for a Phase 2 drilling program. Details of that program should hit the market in the next few months.
We’ve had good luck with Mexican precious metals producers over the years, and other Gold Newsletter components like Endeavour Silver and Great Panther Silver have working mines in this part of Mexico.
Gainey Capital is blessed with a relatively tight share structure, which means that good results from La Higuerita and from the upcoming Phase 2 program have the ability to move the company’s share price.
I like this project and I like the fact that exploration can get paid for, in part, with toll milling. However, Gainey has been moving at a snail’s pace in attacking this business model and its exploration programs, and I’m losing patience in waiting for market-driving news.
It’s a hold for now, and once we see the next batch of drill results we’ll evaluate its status in our portfolio going forward.
Gainey Capital Corp.
Recent Share Price:................C$0.10
Shares Outstanding:.......43.8 million
Market Cap:................C$4.4 million
Fully Diluted:.................60.9 million
Fully Diluted:...........C$6.1 million