Equity Research Group Touts Sonoro GoldBy Paloma Duran | Wed, 08/04/2021 - 11:00
Sonoro Gold has the potential to become Mexico’s next major gold producer, according to an analyst report from Equity Research Group. Equity Research cites Sonoro’s finances, resources, location and a management team capable of developing a prominent project.
Zurich-based Equity Research Group is well known for identifying investment trends, conducting in-depth analysis of major mining companies — most recently Newmont and Ivanhoe Mines — and analyzing the likely outcome of mining developments. In its July report, the group forecast a bull market for copper and gold over the next decade. In addition, it said it expects Newmont will become the investment community “go-to gold miner” of choice. Ivanhoe is expected to become the greenest copper producer in the world, as well as one of the most profitable and lowest-cost companies in the sector.
Sonoro Gold was also among the highlights of the July report, underlining Mexico’s potential. The group added the publicly-listed company to its list of stocks worth owning, calling it a calculated investment with few downsides. “Sonoro is a company with great ‘GoGold’ advantages,” the report said.
A publicly traded, junior exploration and development company, Sonoro has two valuable assets in Mexico: the Cerro Caliche Gold Project and the San Marcial Gold and Silver Project, both located in Sonora.
The company will transition from an exploration company to a producing company in 2022 thanks to its Cerro Caliche Gold Project, which is expected to begin gold production during the first half of the year. Based on the costs of similar mines in the area and Sonoro's published gold grades, along with its planned production rate, Equity Research estimates that Sonoro's initial annual cash flow will at least equal, and could exceed, the current price of its shares. Additionally, experts noted that Sonoro's initial cash flow is expected to increase substantially thereafter. Sonoro has a market cap of around US$28 million and 102.37 million shares outstanding as of its most recent earnings report.
Equity Research highlighted the company's executive team and its successful history of mining development in northern Mexico. Many members of its team have worked on large projects as part of companies such as Glamis Gold, Alamos Gold, Argonaut Gold and Pediment Gold.
That experience and skill are expected to be key factors in the success of Cerro Caliche. An example is Sonoro’s Vice President of Exploration Melvin Herdrick, who has discovered and developed several important gold deposits during the 25 years he has been in Mexico as an exploration geologist. Likewise, Vice President of Operations Jorge Díaz oversaw the design, construction and subsequent operation of low-cost heap-leach gold mines in the 1980s, including Alamos Gold's Mulatos mine.
In the latest report, Equity Research compared Sonoro to Minera Alamos, which has just started producing gold at its Santana mine and is located south of Cerro Caliche. The transformation of Minera Alamos from explorer to gold producer boosted the company's share price by more than 700 percent, from US$0.10 to US$0.78. Equity Research expects a similar performance from Sonoro, and perhaps even more. Sonoro’s share price most recently closed at CAD$0.38 (US$0.30).
Another comparison would be GoGold Resources, whose shares rose from US$0.35 to US$3.50 due to its discovery of high-grade silver and the subsequent release of the PEA for its Los Ricos South project in Jalisco.
Cerro Caliche is expected to put the Mexico-based Sonoro Gold on a similar trajectory.
Sonoro Gold Corp is a gold and silver mineral exploration company with a portfolio of exploration-stage properties in Sonora. The company has a highly experienced management mining team made up of business and finance professionals with a successful track record in discovery through resource development.