Far East Capital Newsletter
Theta Gold offers excellent leverage to the gold price
18 Dec 2022

In This Issue

Theta Gold offers excellent leverage to the gold price

The market is somewhat ambiguous as we close in on Christmas. After the interest rate driven bear market in the first six months of 2022, we had a reversal in the second six months but the recovery was more in the big end of town, not in the juniors. Right now there isn’t one dominant theme pushing money one way or the other, but all of the previously active thematics are simmering away at lower levels of intensity. They are there but with insufficient force to drive share prices (except for moves we saw on Thursday and Friday, when interest rate expectations caused two down days). We are looking for catalysts to drive conviction and until one appears, it is looking rather ho-hum.

Last week we covered West Wits, a prospective gold producer operating in the famous Witwatersrand gold field of South Africa. This week we take a closer look at Theta Gold Mines as it closes in on funding and re-development of the historical Pilgrims Rest goldfield, 370 km NE of Johannesburg.

At market capitalisations of $43m (TGM) and $33m (WWI), both companies are selling at substantial discounts to their calculated NPV from their first phase of operations. Both companies will operate underground mines that will build up to 160,000 oz and 200,000 oz targets respectively, with AISC of US$900-$1,000/oz. Both companies have extensive data bases of technical information and knowledge of historical operations that significantly minimise technical risk. The last, final hurdle for these companies is the financing risk - how to fund development without diluting shareholders too much. 

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