Significant Growth Projected for Gold Producer with Positive Analyst Insights

Soma Gold Corp. (TSXV:SOMA; OTC:SMAGF; WKN:A2P4DU) has announced its financial results and operating highlights for the first quarter of 2024, filing its financial statements and MD&A (management discussion and analysis) for the three months ended March 31, 2024, and the year 2023 on SEDAR.

Soma Gold reported a total production of 7,335 gold equivalent (AuEq) ounces in Q1 2024, marking an 8% increase from the 6,796 AuEq ounces produced in Q1 2023. Revenue for the quarter rose by 21% to US$19.3 million compared to the previous year. The adjusted EBITDA for Q1 2024 was US$6.3 million, slightly down from US$6.8 million in Q1 2023.

The transition to a new mining method in Q1 resulted in temporarily higher production costs, with total cash costs per ounce of gold sold at US$1,192. The average realized cash margin was US$894, compared to US$983 in Q1 2023. The company reported a net loss of US$0.1 million or US$0.00 per share and an adjusted EBITDA per share of US$0.07.

During the quarter, Soma produced 7,335 AuEq ounces from the Cordero Mine and the El Bagre Milling Operations. The Cordero Operations reported attributable cash costs per ounce of gold sold at US$1,192 and an all-in-sustaining cost (AISC) of US$1,760 per ounce. Income from mining operations totaled US$4.3 million, with EBITDA reaching US$6.0 million and adjusted EBITDA at US$6.3 million.

Why Gold? Why Now?

The gold sector is currently experiencing a significant surge, driven by various global economic factors. Katusa Research has described it as "the golden bull market of the century," highlighting how economic instability and soaring inflation are propelling the price of gold to unprecedented heights. This surge in value is expected to attract countless investors and funds, leading to substantial gains for those who act early.

"Some of the world’s most successful investors and financial experts have already begun positioning themselves for this historic gold event," notes Katusa Research, emphasizing the importance of preparing for this shift in the global financial landscape.

Technical Analyst Clive Maund shared a positive outlook on Soma Gold in January 2024, emphasizing the company's potential for substantial growth.

The World Gold Council also underscores gold's unique properties as an asset class, noting that "modest allocations to gold can be proven to protect and enhance the performance of an investment portfolio, reducing volatility and minimizing losses during periods of market shock."

The council points out that investors increasingly see gold as a reliable, tangible, long-term store of value that operates independently of other assets. This perception is bolstered by central banks' continued demand for gold, which has seen a significant increase since the 2008 financial crisis. "Emerging market central banks have increased their official gold purchasing," while European banks have ceased selling, demonstrating a strong, ongoing demand for gold.

According to Statista in March, gold's historical stability and value retention make it an excellent hedge against inflation and economic downturns. "Gold has managed to maintain its value through the ages and — unlike paper currency, coins, or many other assets — it has been a stable way to pass on and preserve the value of wealth from one generation to the next." This is particularly relevant as the world faces ongoing economic challenges. The report notes that "gold prices have remained high" and projections indicate that they will continue to do so until at least 2025.

Company Catalysts

Looking forward to the rest of 2024, Soma Gold has outlined several key initiatives. The company plans to continue exploration along the Otu fault to build total resources and identify the next mining site on its Antioquia properties. Additionally, Soma aims to bring the permitted Machuca mine into production and complete the permit application process for the Nechi mine to enhance resources for the El Limon and El Bagre mills.

Soma is advancing the formalization process for small miners working on the company's concessions, targeting 10% of the total ounces produced by these miners. Discussions with local permitted small miners are ongoing to facilitate contract processing at the El Limon mill. The company is also reviewing potential strategic additions to its concession package, focusing on trends identified by the exploration program.

A significant part of the 2024 plan includes drilling the Cordero deposit at depth with a new underground drill to confirm the deposit's extension and increase the Cordero resource. Geoff Hampson, Soma's President and chief executive officer, stated, "The transition to a conventional mining method continued in Q1, increasing costs per ounce. This transition will largely be completed by the end of Q2, coinciding with the opening of higher-grade zones. The combination of higher grades, reduced development, and waste rock, and an increase in the number of stopes will all contribute to a strong second half of the year. We are very pleased with the progress made in understanding and interpreting the structural geology, which we believe will lead to additional resources, even in some of the mines on our property that were thought to be depleted."

Analysts Are Saying...

Technical Analyst Clive Maund shared a positive outlook on Soma Gold in January 2024, emphasizing the company's potential for substantial growth. "With its gold production set to ramp up substantially this year and in years to come, increasing revenues will rapidly reduce outstanding debt, making the outlook for Soma Gold Corp. scarcely brighter," Maund noted. He highlighted the company's all-in-sustaining costs (AISC) currently being between US$1,200 and US$1,300, which allows the company to benefit from substantial margins at current gold prices.

Maund also pointed out the strong confidence in Soma Gold's management, as they own about two-thirds of the stock. "Their big investment in the company is certainly a vote of confidence," he stated, adding that the company's large land holdings in a gold-rich district hold strong potential for additional high-grade ore discoveries. Despite a recent dip in the stock price due to the temporary step-down of the CEO for personal reasons, Maund views this as an excellent buying opportunity. "The technical outlook for the stock is excellent," he explained, noting that the current drop presents a good price for investors to enter the market.

SADIF Investment Analytics backs up this positive outlook on Soma Gold, writing, "Soma Gold Corp. is a high-quality company . . . with a good business rating, Soma has fair financials and reasonable earnings quality . . . its stock has been upgraded to Good from Above Average."

Ownership and Share Structure

Headquartered in Vancouver, B.C., Soma Gold Corp. has a market cap of US$40.19 million and trades in a 52-week range of CA$0.30 and CA$0.74. As of December  31, 2023, it had CA$1.8 million in the bank, with a monthly exploration budget of CA$330,000.

As a profitable company, it has no burn rate.

According to Reuters, 67.45% of the company is held by management and insiders.

CEO and Chairman Geoffrey Hampson has 18.27% and 0.56% through his wholly owned companies Hampson Equities Ltd. and Lake Forest Development Corp., Vice President Jean-Francois Meilleur has 0.52%, Director Glenn Walsh has 0.31% directly and 44.07% through his wholly owned company, Conex Services Inc., and CFO Greg Hayes has 0.12%.

A further 0.70% of control is vested in institutions.

Palos Management Inc. has a 0.27% stake, and Marmite Capital AG has one comprising 0.33%. Strategic investor Eric Sprott owns 750,000 shares bought in a private placement (0.82%).

2.26% is with strategic investors.

The rest is with retail investors.

Important Disclosures:

1. Soma Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. In addition, Soma Gold Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Soma Gold Corp
3. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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Contributing Author Disclosures

1. For this article, the Company has paid Street Smart, an affiliate of Streetwise Reports, US$1,500 in addition to the monthly consulting fee.
2. Author Certification and Compensation: [Clive Maund of clivemaund.com] was retained and compensated as an independent contractor by Street Smart to write this article. Mr. Maund is a technical analyst who analyzes historical trading data and he received his UK Technical Analysts’ Diploma in 1989.  The recommendations and opinions expressed in this content reflect the personal, independent, and objective views of the author regarding any and all of the companies discussed. No part of the compensation received by the author was, is, or will be directly or indirectly tied to the specific recommendations or views expressed.

Clivemaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be construed as a recommendation or solicitation to buy and sell securities.