A quick glance at Calico Resources (CKB:TSXV) and you might see the same characteristics of a few hundred forgotten gold explorers on the TSX Venture; its shares trade by appointment and many days not at all, its market valuation has been clobbered in recent years and it now trades below $0.10 per share.
But, if you look more closely, the company has achieved an awful lot in a relatively short period at its Grassy Mountain flagship gold and silver project in Oregon, USA.
And then there is the company’s President and CEO, Paul Parisotto.
Mr. Parisotto is the former CEO of Arizona Star, which was bought out by Barrick Gold in a deal worth approximately $773 million in late-2007.
Calico’s market cap has drifted to just under $7 million.
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Calico and its Grassy Mountain Project
Calico has advanced its flagship asset, the Grassy Mountain Project rapidly over the past few years, having recently announced its PEA in January and into the permitting process. It has stout leadership in Paul Parisotto and is located in mining friendly Oregon.
Like in real estate, when it comes to mining, location is all-important.
Calico boasts Oregon’s advantages over neighboring states on its website, explaining that it has low-energy costs and that industrial power rates are less than half of those in California. It has a competitive tax structure, Oregon has landed in the top 5 lowest business rate for past 5 years and the top 2 for new investment in the US, according to the company.
Additionally, there are no mining severance taxes in Oregon.
In regards to Grassy Mountain, Calico’s flagship gold and silver project. On January 13th the company announced a PEA which highlighted the following fey stats:
“Study Predicts 10 Year Operation Averaging 53,000 Ozs of Gold
and 82,000 Ozs of Silver Produced Annually
Estimated Pre-Tax 5% NPV of US$144.2 Million
and IRR of 32.6% at $1,300 Gold and $17.50 Silver”
Click here to read more.
While the IRR at today’s prices in gold and silver has obviously dropped, the company’s reported Total Costs per Ounce of Gold Produced at the above gold and silver prices (Includes all Capital) of $880 per ounce is still competitive even at $1,200 gold. Where things get interesting and potentially very profitable for these types of forgotten stocks is if gold makes a recovery and runs to $1,500 or $1,600 an ounce. Projects such as Grassy Mountain are so heavily weighted to the price of gold that a significant move can change the fundamentals over night.
Calico Resources is one company preparing for just that type of turnaround. The company’s CAPEX on its Grassy Mountain Project is not cheap compared to some, but not over the top by any means.
Life of Mine Estimated Capital Costs at Grassy Mountain
Click here to read more details from the PEA released in January of this year.
Calico turns to market during weak period
Despite the company trading at its 52-week low of $0.09, Calico announced a $2 million private placement this morning, at a price of $0.08 per share (which would be a new multi-year low).
Again, while most would read the headline and not think twice about a cash strapped junior turning to the market in one of the worst historic periods in recent mining history; Calico, unlike the vast majority of juniors following such an announcement, already has a significant lead order.
The company reported that, “FCMI Parent Co., a Company controlled by Albert D. Friedberg and members of his family, has agreed to subscribe for 14.9 million shares of the Private Placement, increasing its ownership in Calico to approximately 19.9%.”
This is well over half the number of shares the company intends to issue.
Paul Parisotto commented that, “We are gratified to have the support of several of our largest shareholders in this financing, particularly Mr. Friedberg, a large and successful investor in resource companies.”
Below is a further excerpt from this morning’s press release:
“Proceeds from the Private Placement will be used to continue the permitting process for Calico’s 100% owned Grassy Mountain gold project in Oregon and fund general working capital requirements. Paul Parisotto, President and CEO of Calico, noted that permitting is proceeding on schedule and that the Company expects to complete its Division 37 application to the State by early next year.”
Click here to read the entire press release from this morning.
Clearly, Mr. Friedberg is a man prepared to buy when there is blood in the streets. With gold trading below $1,200 and in early May, a period when most retail investors are heading for the hills, he is investing north of $1 million into a junior gold stock at its 52-week low.
Calico Resources is a junior resource stock quietly going about its business. It will need gold to turn and investors to wake up to what the company has been up to over the past few years, but with Paul Parisottoat the helm it should be well positioned to meet the challenges of the future.
Our ultimate guide to investing in gold stocks is a must-read resource to learn from data over the last several years and our tips and insights into reading potential investment opportunities in future.
This article represents solely the opinions of Alexander Smith. Alexander Smith is not an investment advisor and any reference to specific securities in the list referred to in the article does not constitute a recommendation thereof. Readers are encouraged to consult their investment advisors prior to making any investment decisions. The information in this article is of an impersonal nature and should not be construed as individualized advice or investment recommendations.
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