Fiore Gold (TSX-V:F│OTCQB:FIOGF│FSE:2FO)– An intermediate gold producer in the making

By Richard Mason


Many companies struggle to stand out from the crowd.

After all, there are tens of thousands of shares listed on markets globally.

For a select few, however, getting noticed is not a case of “if” but “when”.

See, some stories are just too good to remain untold.

Some stocks simply offer such a compelling narrative and so much upside potential at such modest valuations that the investment opportunity is clear.

Fiore Gold (TSX-V:F, OTCQB:FIOGF, FSE:2FO) is one such opportunity, and the market is only now waking up to the enormous potential it offers.

How Fiore Gold (TSX-V:F│OTCQB:FIOGF│FSE:2FO) became one of the market’s brightest opportunities

Fiore’s (TSX-V:F, OTCQB:FIOGF, FSE:2FO) story kicked off with a bang back in 2016 when it acquired three gold assets in a distressed sale.

The previous owner had spent upwards of US$100 million on this portfolio, but Fiore bought all three projects for just US$5 million.

This is hugely impressive by anyone’s standards.

Yet the investment gets better the more you read.

Fast-forward four years, and Fiore has turned its portfolio into one of the gold market’s brightest opportunities.

The company’s two primary assets – the producing Pan Gold Mine and the Gold Rock exploration project – are located adjacent to each other in Nevada.

Pan already contributes over 40,000 ounces (“oz”) of gold production each, allowing Fiore to generate US$4 million operating cash flow in the most recent quarter alone!

This has provided the firm with an incredible boost.

Where nearly all of its competitors are at the mercy of the market to raise funds, Fiore has been able to support exploration internally over recent years.

2020 is no different.

For Fiore is now completing a fully-funded US$2 million drill campaign that aims to increase gold reserves and resources at Pan considerably.

Meanwhile, with permits in hand and a preliminary economic assessment (“PEA”) completed, Fiore also plans to complete drilling and a feasibility study at Gold Rock using internal funds.

Just imagine that.

A gold producer with massive exploration upside and minimal to no dilution!

Moving away from Nevada, and Fiore’s third, largely overlooked project – Golden Eagle – sits in Washington State

With a 2-million-ounce measured and indicated resource, Golden Eagle would represent a strong flagship project for any junior gold firm.  The fact that it is just one of Fiore’s several top-tier opportunities speaks measures to the company’s quality and potential.

Fiore Gold’s (TSX-V:F│OTCQB:FIOGF│FSE:2FO) magic formula

So, why should Fiore Gold (TSX-V:F, OTCQB:FIOGF, FSE:2FO) be at the top of your buy list?

It all comes down to the company’s realizable ambition of producing 150,000 ounces (“oz”) of gold a year by 2023.

Pan already produced 41,491oz of gold in 2019. Mine-optimization carried out by Fiore in recent years is now helping to increase this figure significantly. Production already hit a record 12,085oz in the most recent quarter, and the company is now guiding 45-48,000oz for fiscal 2020.

Meanwhile, as it is already fully permitted, Gold Rock is expected to be production-ready by 2023 following the release of a Preliminary Economic Assessment (“PEA”) earlier this year. When this occurs, the project is expected to deliver a further 50-60,000oz of gold annually.

Not only could this more than double Fiore’s output, but it would also make it the only company listed in Canada or America with a US-only, multi-asset gold production base.

Talk about putting America first!

Beyond this, Fiore is now hunting for another US-based, near-term project that can take it beyond the all-important 150,000oz gold production target.

In parallel to this, Fiore is targeting a joint venture for Golden Eagle with two larger, reputable producers.

Golden Eagle sits next to an internal resource held by Hecla Mining (NYSE:HL) and infrastructure owned by Kinross Gold (NYSE:KCG).

An excellent opportunity exists for Fiore, Hecla and Kinross to consolidate their projects into a separate, stand-alone listed vehicle.  This could create one of only a small number of, multi-million-ounce gold projects with existing infrastructure in the US.

As you can see in the table below, Golden Eagle is already the country’s sixth largest resource held by a junior miner, with the second highest grade! A combination with Hecla and Kinross would look even better.

And this is all happening while the gold price surges…

A bull-run in its earliest stages – Fiore Gold (TSX-V:F│OTCQB:FIOGF│FSE:2FO)

Fiore Gold (TSX-V:F, OTCQB:FIOGF, FSE:2FO) has enjoyed a recent surge in market interest.

By the end of April, the company’s shares had risen 180% over the previous year.

But what if there is reason to believe this strong run could continue to accelerate long into the future?

With the operational progress Fiore is consistently continuing to make, the signs are all there that this well-run company will deliver on its ambitious plans.

That could very well be the trigger for some very interesting action in the market.

If we compare Fiore’s market cap to its producing peers, a picture starts to develop of what might be possible.

Look at the table below, which pits Fiore against a select group of junior gold firms producing fewer than 150,000oz of gold equivalent annually as at 21 May 2020.

Peer group of select sub 150kozpa AU Eq producers

At US$65 million, Fiore sits right at the bottom of the table – much smaller than its closest comparator, Great Panther (NSYE:GPL), and far below the peer group average of US$376 million.

A similar picture continues to present itself in the two graphs below.

These compare the same group of companies’ enterprise value to their projected 2020 production and their share price relative to their operating cash flow per share.

2020 production guidance based on each company’s mid-point estimate for 200 (pre-COVID), using 110 Ag:Au ratio Source: Company Reports, S&P Capital IQ. Figures calculated as of 21 May 2020.

In both cases, Fiore is considerably below the average, and positioned towards the very bottom of its group of peers.

The three comparisons all point towards one conclusion – Fiore looks undervalued.

However, an upside move could be just around the corner.

With no debt and working capital of US$28 million, the market is attributing just US$55 million of enterprise value to Fiore’s entire portfolio at its current valuation.

Pan stand-alone delivered US$6 million of operating cash flow in Q2 2020, demonstrating significant annualized cash flow potential.

Gold Rock’s recent PEA gave it an NPV of US$77.2 million at a US$1,600 gold price.

When you also consider Golden Eagle’s 2-million-ounce resource, it is obvious that the market has not yet understood Fiore’s ambitious, well-defined, largely internally-funded strategy, and its upside potential.

As the gold price continues to move from strength to strength, it seems only a matter of time before Fiore Gold’s (TSX-V:F│OTCQB:FIOGF│FSE:2FO) stock rerates higher to reflect its continued progress.


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Author: Richard Mason

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