Joel’s Resource Report – a multibagger in the making? #CGNR

Joel’s Resource Report – a multibagger in the making? #CGNR

At the time of writing, the author does not have a position in CGNR.

Hi all, I hope the markets have been treating you well. My portfolio took at all time highs last week – I’m now up over 80% year to date which I’m obviously rather happy about.

That being said, things can change in the blink of an eye, so I’m trying not to be complacent or count chickens before they’ve hatched.

The resource company I’ll cover today is one which I’d ordinarily view as a bit of a dog. it’s been listed for years, has been undercapitilized, living placing to placing, and management haven’t had the funds to do meaningful work programs. The company is Irish exploration company Conroy Gold And Natural Resources PLC. At 32 pence. Conroy’s market capitalization is £10 million:

(source: google)

It should be noted that around five years ago there was a share consolidation.

What does CGNR have?

“Conroy Gold’s primary focus in Ireland is the development of a gold mine on its Clontibret gold target and the continued exploration of the district scale, 65km (40 miles) gold trend, which the Company has discovered along a major geological structure, the Orlock Bridge Fault Zone, in the Longford – Down Massif, in northeast Ireland.”

Conroy has the following JORC Resource estimate on its Clontibret area:

(Source: Conroy)

PEA – results

A preliminary economic assessment showed the following results on the aforementioned resource on capex of just $18.5 million:

(Source: Conroy)

At current gold prices, Conroy’s market cap looks woefully low versus NPV but it must be said that PEAs don’t have a high degree of certainty. The PEA would not be sufficient to fundraise, but it gives investors an idea of the type of upside available.

How Conroy can unlock their potential – Anglo Asian Mining JV

On 21st July, Conroy announced a proposed JV with Anglo Asian.

Anglo Asian are a gold mining company based in Azerbaijan that I covered earlier in the year for Cube.

The key heads of terms highlights are as follows:

  • The Joint Venture goal is the development of a gold mine and further exploration and development along the district scale gold trend which the Company has discovered in Ireland.
  • Anglo Asian Mining to acquire an initial 17.5% working interest in the Joint Venture for committing to spend €2 million on a primary expenditure programme.
  • Option to increase working interest to 25% by spending a further €2 million to complete the Primary Expenditure Programme of a minimum of €4 million.
  • Further option to acquire a total 55% working interest in exchange for committing to meet the expenditures of the Secondary Expenditure Programme in order to advance the Clontibret Gold Deposit to mine construction ready status and certain further exploration expenditures.

In essence, Anglo can earn 25% of Conroy’s projects by spending €4 million on exploration drilling. This compares favorably to Conroy’s £10 million market cap (€11 million). Assuming drill success, Anglo might very well look to take their interest up to 55%, by further advancing the project.

Cash balance

Like any junior, cash is usually tight. Thankfully, Conroy just raised £800,000 which should see them cashed up for some time.

Valuation catalysts

There are a number of catalysts that I believe could start to rerate Conroy’s share price in the near term (next three to six months):

  1. Signing of the JV
  2. Announcement of exploration drilling program
  3. Confirmation that gold mineralization extends down below 300m
  4. Positive drill results

Professor Conroy, Chairman of the company was recently interviewed here:

Conroy Gold is early in its journey towards gold production, but Anglo’s involvement is a real endorsement of its projects. The additional funding and accelerated development should provide plenty of excitement of shareholders. Depending very much on success with the drill bit, the market cap could grow – it’ll certainly be interesting to track the company’s progress.

Till next week!

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    The clue is in the name ( they just cant help themeselves ) Its just like Condor Gold . Its been a directors con gravy train for years ( both have ) Share holders have been repeatedly slaughtered and generally treated as expendable . At your own risk ……but barge poles dont come long enough . Suggest a look at Kefi and Bluebird , both on the path to production and with somewhat better conduct along the way .

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    There is a good deal of local opposition here. The proposed work also seeps across the border into Northern Ireland, where any form of mineral development seems to be universally condemned as the devil’s work.

    It would also worry me that Conroy’s website exhibits the grammatical and punctuational values of a Nigerian internet fraudster.

    My guess is that there are better holes in the ground to throw your money into than this one. A better gold play might be GDP, which is profitable and solvent.

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    I don’t disagree that Conroy has been a bit of a dog, with AAZ coming and potentially bankrolling a big drilling campaign I can see good upside. Ironically I view Kefi as a gravy train, dilutions been horrendous. Bluebird is interesting although I’ve found the company difficult to value historically. I’ll take a look at Goldplat thanks for the tip!

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