Kingman Minerals Ltd. (TSX.V: KGS) Set to Benefit as Gold Prices Rally
-Gold prices have risen by nearly 15% in 2020, reaching levels last seen in 2011, following deluge of monetary, fiscal stimulus across globe
-During global financial crisis of 2008, gold prices rallied by 34% while index of gold mining companies saw its value rise by over 100%
-Kingman Minerals has secured 72 lode claims in area spanning nearly 1,500 acres in Arizona’s Mohave County
During a quiet summer morning in August 2011, gold prices hit their historical peak – sharply rising to $1,917.90/oz. Nine years ago, gold prices were on a tear; the precious metal had rallied by 32.3% in eight months, driven by fears that rising sovereign debt levels and unprecedented levels of monetary debasement would lead to a gargantuan spike in inflation (http://ibn.fm/jDEP8). However, it would take nearly a decade – and a global health pandemic – for gold prices to return to their former heady heights. The recent appreciation in gold prices coupled with the metal’s vast upside potential has sparked renewed investment interest in mining companies; Kingman Minerals (TSX.V: KGS), a Canadian-listed gold miner with extensive claims in key mining jurisdictions spanning the North American continent, is poised to be among the biggest beneficiaries of the trend.
In late 2007, the global economy was beginning to witness the initial fault lines of the impending downturn – however, few could have predicted the speed and ferocity of the financial crisis to come. By October of that year, the Fed had responded to the ongoing liquidity crisis by slashing the United States’ benchmark interest rate to 1% – a historic low at the time. As the US economy and equity markets were coming under near continuous onslaught, there was one corner of the market which seemed to be virtually unscathed. During one 133-day interim, while the S&P 500 index would decline by 21% prior to finally hitting its bottom, gold prices would surge by 34%, and the VanEck Vectors Gold Miners ETF (“GDX”), an ETF tracking some of the largest gold miners on the planet, would see its value more than double (http://ibn.fm/0RcWb).
Recently, a rekindled investment interest in the yellow metal seems to point to history repeating itself—creating an advantageous position within the space for companies with proven assets. Kingman Minerals, which specializes in sourcing and developing existing, non-grass roots properties within old mining sites, announced that it had recently secured mining interests within the Music Mountains in Mohave County, Arizona, within a territory encompassing 72 lode claims and spanning nearly 1,500 acres. The Mohave project, located 35 miles outside the town of Kingman from which the company takes its name, includes the historic Rosebud mine and has long held a well-deserved reputation for its abundant mineral resources. Gold was first discovered in the area as far back as 1879. The Rosebud mine in particular was discovered in the 1880s and mined primarily in the late 1920s and 30s, with approximately 3,000 tons of ore being removed over that interim (http://ibn.fm/KkS5D).
In 1985, a sample study was carried out at the then-shuttered Rosebud Mine by Stellar Resource Corp., which sought to derive estimates as to the potential mineral content of the mine. While the estimates and assay values could not be verified or relied upon and were not NI 43-101 compliant (http://ibn.fm/xS4Ls), the Stellar Resources’ reports suggested that the mine’s potential assets could amount to as much as 664,000 ounces of gold and 2,600,000 ounces of silver (http://ibn.fm/U980j).
Gold prices have risen by nearly 15 percent in 2020 with Goldman Sachs recently upgrading its 12-month price forecast for the metal to $2,000/oz (http://ibn.fm/m2IzB), while Bank of America has gone on record to suggest prices could rally even further, signalling $3,000/oz as a potential 18-month target (http://ibn.fm/zw3SB).
Gold mining companies have historically enjoyed a very close correlation to the price of gold. In late 2008, equity investors who were unable to physically purchase gold utilized gold mining companies as an investment proxy by which to gain exposure to the precious metal. The gold mining sector’s depressed equity valuations and elevated dividend yields only served to further heighten their appeal.
The VanEck Vectors Gold Miners ETF (“GDX”), which famously doubled in value in the midst of the global financial crisis, has risen by 15% this year, outpacing the return offered by Kingman Minerals. However, with the company currently working on formulating the NI43-101 compliant technical report on its Mohave county assets and with equity investors increasingly looking for new avenues by which to capitalize on the ongoing gold price rally, Kingman Minerals stands to only benefit further from the investment world’s renewed interest in gold.
For more information, visit the company’s website at www.KingmanMinerals.com.
NOTE TO INVESTORS: The latest news and updates relating to KGS are available in the company’s newsroom at http://ibn.fm/KGS
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