The Critical Investor takes an in-depth look at Genesis Metals, which is developing a new geologic model for its 100%-owned flagship Chevrier Gold deposit in Quebec.
Being established at the peak of the last precious metals bull market as its predecessor Entourage Metals, junior explorer Genesis Metals Corp. (GIS:TSX.V; GGISF:OTC) didn't have the easiest of times to make a name for itself. Despite a set of very prospective claims and a very experienced team of well-known geologists, things went south during the bear market as significant new discoveries couldn't be made at the time.
After Entourage Metals acquired Tawsho Mining on March 1, 2016, in an all-equity deal, they received ownership of the Chevrier Gold project in Quebec, and changed their name into Genesis Metals, effective on March 2, 2016, as they became a different company with a much more advanced asset. The Chevrier Gold project is the current flagship project of Genesis Metals, and albeit with a small resource, there is a lot of potential to expand this into something substantial. New capital is being raised at the moment, and new drill- and exploration programs will start soon, aiming at significantly improving the understanding of Chevrier. And this is just the beginning.
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All currencies are in US Dollars, unless stated otherwise.
Genesis Metals is a Canadian exploration and development company focused on creating shareholder value through advancing gold projects in Quebec and Ontario. The company is developing a new geologic model for its fully owned flagship Chevrier Gold deposit in Chibougamau, Quebec, and is determining a strategy for the fully owned October Gold property in Ontario, located in the vicinity of, and on trend with, Goldcorp's Borden Lake deposit and IAMGOLD's Cote Lake deposit.
The management team has Brian Groves at the helm, who has several decades of experience ranging from exploration to project development, and from capital markets to corporate strategy at major companies like AMAX Minerals, Noranda and Placer Dome, but also served over 13 years as a CEO for two TSX Venture companies. Standout asset for Genesis is the very strong geologist team, consisting of Executive Director Adrian Fleming, and Chairman Rob McLeod (currently CEO of IDM Mining), both instrumental in discovering and advancing the White Gold deposit of Underworld Resources. Executive VP and long-time ex-CEO Jeff Sundar also has a long history with Underworld Resources, so it looks like a reunion of sorts. Adding to this is former management team member and director John Florek, a former prominent geologist with Barrick Gold.
Genesis Metals has its main listing on the main board of the TSX Venture, where it's trading with GIS.V as its ticker symbol. With an average volume of in excess of 135,000 shares per day, the company's trading pattern is quite liquid, which makes it easier for investors to get in or out, and reduces the aggressive volatile share price moves you sometimes see with less liquid companies.
Genesis Metals currently has a pretty tight 45.59M shares outstanding (fully diluted 60.38M), 10.6M warrants (the majority is due @C$0.20 or more, of which 5.7M warrants @C$0.20 expiring on March 21, 2018) and several option series to the tune of 4.175M options in total, which gives it a market capitalization of C$6.84M based on yesterday's share price of C$0.15. When the C$600k financing will be closed, which is any moment now, Genesis Metals will have a working capital position of about C$900k.
After enjoying the benefits of a higher gold price, a new asset and new plans for 2016, the share price almost tripled in 2016, only to give back all gains when gold went down again, and arrive at the same lows again at the peak of tax loss selling season (mid December). Since then gold ran up again and Genesis Metals is getting ready for the next phase of exploration (drill programs), which will be after the raising of cash and finishing geologic modelling, the share price already recovered a bit. Solid drill results and an updated resource estimate according expectations should be able to move things considerably, as the current market cap is tiny, and the structure is tight.
Genesis Metals has two projects in very mining friendly jurisdictions, the Chevrier Gold project in Quebec, which is the flagship project, and the October Gold project in Ontario. The focus of my attention will be at Chevrier of course, but the other project will be discussed briefly too as it isn't insignificant.
The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, MSc background in construction/project management. Number cruncher at project economics, looking for high quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long term commodity pricing/market sentiments, and often looking for long term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources which more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.
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Disclaimer: The author is not a registered investment advisor, and currently has a long position in Genesis Metals, Aurvista Gold and Moneta Porcupine Mines. Genesis Metals is a sponsoring company. All facts are to be checked by the reader.