I first wrote about Viva Gold Corp. (VAU:TSX.V; VAUCF:OTCBB) exactly a year ago. The price of gold was about $1300 and the price of a share of Viva was about $0.32. Now gold is $1280 and Viva is still at $0.32. The company has an interesting story and while the price of the shares and gold hasn’t done much lately, the company has.
Go back and reread what I wrote a year ago. Basically the Tonopah gold project was owned by Midway and had a half million-ounce resource drilled off in over 600 drill holes. Midway broke their pick and went into bankruptcy. While the project was attractive and would have had a swarm of bidders in the bankruptcy court it carried a 7% NSR. That is a deal killer in 99.9% of the known universe.
Viva handed the court a check for $25,000 for the project. (Making a price of $0.05 per ounce of gold resource) There was this slight problem of having an overhang of the 7% NSR which pretty much meant they needed a price of gold of somewhere around $50,000 an ounce to break even.
Viva went to the underlying holder of the NSR and pointed out that they could wait patiently for gold to go to $50,000 an ounce or they could both make money by coming up with a number for the NSR that made sense. The claim holder saw the logic and agreed to a far more reasonable 2% NSR. Viva then hit the ground running.
Viva Gold has a tiny market cap of about $7 million that means you can pick up ounces of gold in the Walker Lane Trend for about $17 an ounce.
The project is similar to the Round Mountain Mine (20 million ounces) located just 50 km to the north and on the same trend as the Manhattan Mine, Gold Hill Mine and Goldfield. There is excellent potential for doubling the number of ounces by drilling between the Tonopah target and the Midway Hills target.
In 2018 and early 2019 Viva completed 28 infill holes confirming the $20 million worth of prior drilling and the large scale open pit potential. The increase in confidence level of the resource was shown in a press release dated May 21 showing a 36% increase in ounces in the M&I category and a 17% increase in grade in the measured category.
The interest in resource shares has basically sucked for the last couple of years and it has been difficult for junior companies to raise money. Viva has done an excellent job of (1) picking up a great project for peanuts and (2) advancing the project even with limited resources.
The company is in the midst of another private placement for between $1 and $2 million that would be spent drilling between the existing resource and Midway Hills to increase the number of ounces.
I own shares bought in the open market and I intend to participate in the private placement. Viva Gold is an advertiser and that means I am biased. Do your own due diligence.
Viva Gold Corp.
VAU-V $0.30 (May 22, 2019)
VAUCF-OTCBB (Pink) 20.8 million shares
Viva Gold website.
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
[NLINSERT]Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Viva Gold. My company has a financial relationship with the following companies mentioned in this article: Viva Gold is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
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