Value Microcaps Junior Miners

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GORO Gold Resource Corp. Last post I called a near term double off the current cheap valuation of GORO shares.

News just out today the Arlington Group Asset Management Limited group put out a report. Analyzed 2 ways at over double the price of todays shares with a prediction for a hefty dividend increase which is what I see coming and inevitable.

The complete report.
http://goldresourcecorp.com/content/arlington-group-20190319.pdf

http://www.agam.co.uk/ Arlington Group Asset Management page

Report Conclusion:
Gold Resource Corp is at a significant stage in its development. The
Oaxaca mining unit in Mexico is a strong cash flow generator in its own
right and looks forward to mining upwards and laterally at Switchback.
Over the years to come, this offers the potential for an increase in
precious metal grades, turning the trend of production back towards gold.
This, we conservatively estimate, will allow Gold Resource Corp to
maintain, at the very least, cash flow from operations at approximately
$30m.

Near-term gold production from Isabella Pearl in Nevada opens up a
new production hub, which we forecast will generate between $20-30mln
in additional cash flow from operations from year two.

With between $50-60mln of annual cash flow from operations once
Isabella Pearl reaches steady state, Gold Resource Corp will soon have to
consider how to allocate the cash flow, after considering sustaining and growth capital needs.
With the company’s strong dividend paying
record and philosophy, the potential for up to $20mln of this cash flow
being set aside for dividends seems high.

When considering Price to Cash Flow multiples (P/CF), Arlington
Group calculate the large-capitalisation, North American precious-metals
sector trades on 11.8 times. If we apply this multiple to our projected
future cash flows in 2021, we generate an equity value of US$671mln, or
US$11.63 per share.


The company also appears undervalued when assessing value on a Net
Asset Value (NAV) basis, trading on only 0.56x. Since Gold Resource
Corp is a high-quality company, with near-term growth and no debt, we
believe a 1.2 times NAV multiple is justified, bringing our fair value
forecast to US$8.47.