Pershing Gold Corp fka PGLC

[someconcerns]

And a bit of publicity as well:

http://finance.yahoo.com/news/junior-gold-miner-soon-show-173219725.html

This Junior Gold Miner Will Soon Show Its Mettle
GuruFocus.com
December 2, 2016

- By John Persinos

Gold has long been considered a "safe haven" for investors in times of uncertainty. With Donald Trump's unexpected electoral win already taking the financial markets by storm, some analysts are pointing toward gold being a good bet for the next four years.

If you're not willing to start hoarding bullion or bars, gold miners make a sensible way to play a run-up in gold. The name of the game, however, is finding one that's not overpriced.

This low-cost gold mining firm (with a pretty solid leverage to rising prices) has in fact seen a drop of over 10% in the last month. That's giving us a pretty good discount opportunity.

However, Pershing Gold (PGLC) remains a rock-solid investment opportunity. This emerging gold producer from Nevada stands apart from its sector rivals.

Insider buying has picked up at Pershing with a major spike in November alone. In addition, Pershing announced on Dec. 1 that it had entered into a nonbinding term sheet with Sprott Resource Lending for $20 million in financing. Pershing also announced on Dec. 2 that it had raised $7.5 million in a public offering.

The company's principal growth and capital driver is the promising Relief Canyon Mine, an economic asset that previously produced gold when prices were much lower.

This places Pershing at a vantage point with the required infrastructure (including processing facilities) to start commercial production at a location that boasts a track record of low-risk but highly productive mining.

The Relief Canyon Mine has land holdings covering approximately 25,000 acres with the opportunity to increase the deposit and strike new discoveries on nearby areas.

The savings Pershing would accrue in mining would imply greater returns and a rapid payback (1.4 years only) for the company's stakeholders.

Here's a possible thesis, assuming gold prices near $1,250 per ounce: If Pershing Gold chooses a self-mining option, its mine can result in a pretax net cash flow of $247.6 million roughly over the life of the mine (5.8 years). Further, contract mining can give it a net cash flow of $206 million.

With gold prices on an upswing, it's estimated that each $50 increase in gold price creates about $20 million in net asset value, leading to additional cash flows.

Further, here are two other factors that could work in Pershing Gold's favor:

First, there's the opportunity for re-rating. As Pershing Gold fast tracks to production, the stock should receive a re-rating. A recent investor presentation shows that Pershing Gold trades at a steep discount to peers like Roxgold (ROG.V) and TMAC Resources (TMR.TO) (as per stock price/per share net present value). If Pershing does step up and garner the 1.3-1.4 multiple offered to its peers, there could be gains in the range of 100%.

Second, Pershing's operations are startlingly low cost. Gold mining hinges on producing gold in a cost-effective manner and then selling it at a premium. A smart way to measure this is the all-in sustaining costs (ASIC) per ounce. For 2017, Pershing Gold's cost is estimated at $709 (self-mining) compared to Torex Gold Resources (TXG.TO) ($725), Richmont Mines (RIC) ($885) and Asanko Gold (AKG) ($866). The truth in these numbers lies here: Pershing Gold is valued at less than $100 million (market value), but all the other companies are valued between $400 million and $1,250 million.

With zero debt and a reasonable balance sheet (cash in hand), Pershing relies on a strong group of shareholders, allowing the company to raise funds at a reasonable valuation amid a difficult market for resource stocks.

The upshot: Pershing Gold remains worthy of investor interest and confidence.

Disclosure: The author owned none of the stocks mentioned at the time of publication.

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This article first appeared on GuruFocus.