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So far, our experience since acquiring PGDM from Equinox Gold on April 16 last year, is that currency movements in the BRL have as much of an influence on profitability as the gold price. Although most gold bugs are in the camp that the US dollar is going to fall, I would not be surprised if we continue to see dollar strength and more weakness in the major currencies like the Euro, Yen and emerging markets. What is also possible, is that "Peak Inflation" might be wishful thinking like "Transitory Inflation" was, and that after the significant pullback in commodities we might be setting ourselves up for another move up. For gold I believe we are heading back up to $2,100 per ounce in the coming months as Bitcoin continues its slow motion train crash to $10,000. Time will tell, but as a company, our key focus is to reopen Caiamar and Sertão and take advantage of rising prices.
After the successful 70 cent fund raising earlier this year, we are launching a $1.00 round with a full warrant of $1.50 per share. This values the company at C$207 million, with funds raised going into Caiamar and Sertão.
I like to compare ourselves to K92 Mining (KNT CN) in Papua New Guinea. K92 gave us the opportunity to make our first acquisition for Pilar in May 2019 when we swapped our K92 stake for Sertão. We made the swap because we believe Sertão is higher grade than their Kora mine. Thanks to the incredible leadership of John Llewins and his team, K92 produces around 110,000 ounces gold equivalent a year, with daily mill capacity of 1,300 tonnes at an average recovered grade of 8 g/t and a market cap of C$1.9 billion. The success of K92 is well known now, but back in early 2016 when we put the financing together, big banks were telling the world that gold may fall to $800.
As a comparison to K92, Pilar Gold is on track to produce 45,000 ounces this year using its 4,500tpd mill at an average grade of 1 g/t. Sertão is coming onstream later this year and I personally believe it will deliver an additional 45,000 ounces in 2023 at an average grade of 16 g/t - twice that of Kora's grade. If we were to take half of K92's market cap, that would imply a C$4.60 per share valuation for Pilar Gold. Of course, we still need to deliver that grade and until we do the market won't believe us - just like it didn't believe K92 in early 2019 when drilling success started at Kora.
Either way, we know Caiamar and Sertão are much higher grade than our current feeds from Pilar and Maria Lázara. What is interesting is that it took K92 over 3 years before they started to hit the headlines. We are now 3 years into our journey and I really believe our team will repeat K92's winning formula.
Click on the link below for the subdoc to our $1 round and don't hesitate to call us if you have any queries.
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