Let’s take a look at what some are saying to be the most undervalued gold exploration stock out there…
Xtra-Gold Resources Corporation (“Xtra-Gold”) trades under the ticker symbol XTG on the Toronto Stock Exchange and XTGRF on the New York Stock Exchange. It’s a gold exploration corporation based in Ghana, West Africa, making a potentially significant resource on the Kibi Gold Discovery.
Ghana has become a popular destination for various mining investors in recent years, particularly for gold production and, as a result, the identification of new feasible mineral deposit zones within an area.
Read on to learn more about Xtra-Gold Resources Corp. and the Kibi gold project in Ghana.
What You Should Know About Xtra-Gold Resources Corporation
For almost ten years, Xtra-Gold Resources Corporation has been drilling and extracting gold and building a legion of loyal stockholders. Additionally, Xtra-Gold Resources Corporation recorded a net income of US$1,920,672 in the first quarter in May and had no debt at the end of the period.
And this is one of the things that makes Xtra so unique. Unlike most exploration stocks, Xtra-Gold doesn’t have to raise money every year. So how have they been able to accomplish so much while remaining debt-free?
Over the last seven years, these sales have been generated through contractual alluvial gold mining, resulting in gold sales/cash flow of around $5 million each year.
Now, the corporation is involved in the drilling and mining of gold in Ghana’s Kibi Greenstone Belt, which includes five mining leases totaling 55,094 acres. This is worth over $66 billion in GDP. Ghana has a democratic government and a legal system based on British commonwealth law, making it one of Africa’s most politically stable countries.
Ghana has been the main mining destination for large mining companies for decades, with more than 150 million ounces of gold and 4.5 million ounces of annual production.
But what does this Kibi Gold project entail? Let’s find out.
What is the Kibi Gold Project?
Kibi is the capital of the East Akim Municipal District located on the eastern slopes of the Atewa Range in Ghana’s Eastern Region. So with the Kibi Gold Project in Ghana, Xtra-Gold continues to expand gold mineralization; the Kibi Gold Discovery is still showing signs of being a world-class deposit.
Other top four public gold trading companies operating in Ghana include:
- Newmont Mining
Again, over the last decade or so, all four of these companies are draining their reserves in Ghana, and none of them have made significant investments in grassroots exploration.
Xtra-Gold Maiden Discovery
In August 2012, Xtra-Gold made a Maiden Discovery. This came in two categories:
- Indicated gold reserves total 278,000 oz (3.38 million tonnes grading 2.56 g/t).
- Inferred gold reserves of 147,000 oz (2.35 million tonnes grading 1.94 g/t)
Over the last few years, the Exploration Team has identified over 6 new drill prospects through grassroots exploration. All of these drill targets are ready to drill and might make a significant contribution to the “Maiden Discovery.”
Also, on August 11, Xtra-Gold published a press statement disclosing promising results for the drill, including a “freshly found gold zone (“Twin Zone”) that is parallel to the Xtra-Gold Double 19 deposit structure.”
The recently discovered gold zones of Twin and Boomerang indicate economic grades at the beginning of drill results, and the business expects to add roughly twenty drill holes each to check the size of the ore body to estimate the amount it is going to add.
Efforts of Xtra-Gold Resources Corp in Kibi Project
Xtra-Gold has only drilled about half of the region of this 2.5-kilometer strike length gold anomaly. Its 2 million ounce gold deposit, which accounts for around 1% of its whole position in our gold belt, is still existing in this location alone.
Once the Kibi Gold Project has a deposit of 1 million ounces or more, it marks a major gold discovery. And if they continue to drill to the depths in this new zone, it will reach 1 million ounces in the following 90 to 120 days. The institution hopes to expand the resource to 2 million people over the next 18 to 24 months.
Xtra-Gold Corporation Objectives
Diamond drill rigs are owned by Xtra-Gold, which has lowered drilling costs by almost 80% and will speed up resource expansion. Its two rigs are now drilling in Zone 3 of the Kibi Gold Project to demonstrate Maiden Discovery’s enormous growth potential.
They want to raise the resource estimate to over one million ounces of gold and then see where it goes from there. The following slide from their corporate presentation depicts a portion of their work area.
The value of gold in the ground fluctuates between 1% and 0%. If gold is trading at $1,500 per ounce and an exploration company can prove up to 2 million ounces of gold, the fair value sell-out price should be $300 million. Xtra-Gold has a market capitalization of fewer than 50 million shares, equating to US$6 per share. If gold rises to US$2,000 or more, a fair take-out at a 2 million-ounce resource would be US$8.
Funds For Future Drilling
With the progress made so far by the Xtra-Gold Resources corporation, they have the funds to fund another future drilling.
“The Company will continue to demonstrate its ability to self-finance its drilling/work programs through the Community Mining Project,” stated James Longshore the founder, and CEO of Xtra-Gold Resources Corporation. “We also have enough cash to internally finance our work programs for 2021 and 2022, thanks to this quarter’s net income of around $2 million.”
More On The “Gold Coast”
In 2019, the West African nation of Ghana overtook South Africa to become Africa’s leading gold producer.
But it’s not like Ghana is new to gold mining.
Traditional (alluvial) gold mining in Southern Ghana reportedly dates back to the fifth century, long before Europeans started to arrive in the fifteenth century.
British colonialists were so impressed that they famously called Ghana the “Gold Coast”.
Now, according to the World Gold Council (WGC), Ghana is the world’s seventh biggest gold producer with 4.58 million ounces produced in 2019.
Ghana’s low cost mines and friendly investment policies have catapulted it to pole position in Africa. This comes at a time when South Africa’s costly gold mines, incessant union strikes, and national electricity shortages have caused a steady decline in gold output.
All this is nothing new to majors.
Some have been active in Ghana for a long time while some have recently pivoted to the country.
Newmont Goldcorp, the world’s largest gold mining company, began Ghanaian commercial production in 2006, while GoldFields of South Africa has operated there for 26 years.
Meanwhile, AngloGold Ashanti, the world’s third-largest gold mining company by output, recently shifted continental focus from South Africa to West Africa, including Ghana.
Other majors active in Ghana include Perseus Mining, Kinross Gold and Golden Star Resources.
Without a doubt, the presence of many majors confirms Ghana as an attractive gold mining hotspot.
Naturally, the continued success of majors has drawn many juniors into the fold, and one of the earliest juniors to set up shop in Ghana is Bahamas-based Xtra-Gold Resources Corp. (OTCQB: XTGRF; XTG.TO).
It started trading on the Toronto Stock Exchange in November 2010.
Despite being a junior, Xtra-Gold has found a unique way to fund its aggressive exploration of a new gold belt in Ghana without borrowing money or issuing shares, which dilutes shareholders’ interests.
If you’re looking for a shareholder friendly junior miner that’s on the cusp of defining mineral reserves at its vast properties in a gold mining hotspot, then you should consider Xtra-Gold.
ZERO DEBT AND ZERO DILUTION
Southern Ghana has four man gold belts: Ashanti, Sefwi, Asankrangwa, and Kibi.
Ashanti, which has estimated resources of over 130 million ounces of gold, hosts Ghana’s biggest gold mines and biggest gold producers.
While Ashanti, Asankrangwa, and Sefwi are well explored, Kibi is not.
Yet, Kibi is located near Ashanti (see Figure 1) and is said to be geologically analogous to the other three belts.
Figure 1: Gold Belts of Southern Ghana
Source: Xtra-Gold Resources website
Since Xtra-Gold commenced exploration in Ghana in 2006, it has stuck to the Kibi Gold Belt, where it holds five Mining Leases/Concessions (Muoso, Banso, Kwabeng, Pameng and Apapam), totaling approximately 226 sq km (22,600 hectares or 55,905 acres).
Furthermore, its focus has been on its flagship Kibi Gold Project, which is located in the Apapam Concession.
Kibi Gold Discovery Project
In November 2012, Xtra-Gold announced a NI 43-101 compliant maiden mineral resource estimate that identified the discovery of five gold deposits (Big Bend, East Dyke, Mushroom, South Ridge, and Double 19) in Zone 2-Zone 3 exploration area of Apapam.
The five deposits collectively hosted 278,000 ounces of gold at an average grade of 2.56 grams per tonne (“g/t”) in the Indicated category and 147,000 ounces of gold at an average grade of 1.94 g/t in the Inferred category.
Encouraged by this discovery, the company has intensified drilling at Apapam, and its immediate goal is to further drill Zone 2-Zone 3 to define more gold resources.
Furthermore, it has identified two new drill targets at different parts of Apapam for further investigation: the Cobra Creek Gold Project (Zone 5) and the Hillcrest Gold Target (Zone 6).
Ultimately, Xtra-Gold plans to define 1 million ounces of gold and, perhaps, ultimately turn the Kibi discovery into a multi-million ounce world-class deposit.
Meanwhile, the company continues hard rock prospecting at its other concessions.
All told, Xtra-Gold’s dominant acreage and first mover advantage on the Kibi Gold Belt gives it huge upside potential.
Another plus for the company is its ability to maintain a tight share structure.
Funding Exploration Without Shareholder Dilution
Unusually for a junior with no defined mineral reserves, Xtra-Gold has no debt and has not issued new shares for years.
Yet, its exploration programs for 2021, and possibly 2022, are fully funded.
In March 2013, Xtra-Gold commenced alluvial (placer) gold mining at its Kwabeng Concession using independent contract miners (small scale miners).
In 2015, it commenced similar operations at the Banso and Muoso concessions, and in 2020 at Pameng.
Sales of bullion have generated average annual cash flow of USD4 million since 2014 – bullion sales in 2020 was USD5 million plus.
According to a September 2015 press release, “the Company has been successful in mining placer (“alluvial”) gold material since early 2013, to fund all exploration activities to date on its Kibi – Winneba greenstone belt (“Kibi Gold Belt”) land position. Due to this success, the Company has raised no new equity since December 21st 2012”.
The company believes placer gold recovery at Kwabeng could be sustained for 20 years.
Still, the stock downtrended for a large part of the past decade – see Figure 2.
FIGURE 2: Xtra-Gold Resources OTCQB Stock Chart
Some market observers ascribe this downtrend to the company’s low popularity with analysts.
However, it could be a reflection of the numerous private placements the company did to fund its exploration programs before 2014.
As Figure 2 above indicates, the stock started to turn around the beginning of 2015.
Xtra-Gold Resources is a Bahamas-based junior miner pioneering the discovery of the new Kibi Gold Belt in Ghana, which is now Africa’s biggest gold producer.
It has got a dominant acreage position on the new gold belt, where it holds five concessions totalling almost 56,000 acres.
Currently, the company is mining alluvial gold at four of these concessions and exploring lode mining at one.
Xtra-Gold’s mid-term growth strategy is to use its alluvial gold bullion sales to fund extensive drilling at its flagship Kibi Gold Project where it’s already identified five gold deposits.
As it obtains more drilling results, the company is increasingly confident that it can turn the project into a world class deposit.
Commenting on this possibility in November 2020, James Longshore, the company’s CEO/Co-Founder said, “I’m in Ghana now for a site visit of our exciting Kibi Gold Project, which continues to exhibit the potential to be a multimillion ounce gold discovery. Based on our excellent Q3 2020 results, our Company is fully funded to execute our business plan for 2020 to 2021, which will require no outside financing from the capital markets. As our gold discovery increases in size, our shareholders will have significant upside leverage in our share price at the current spot gold prices.”
Please read our full disclaimer by clicking here. Statements regarding the Company which are not historical facts are “forward-looking statements” that involve risks and uncertainties. Such information can generally be identified by the use of forwarding-looking wording such as “may”, “expect”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements due to factors such as: (i) fluctuation of mineral prices; (ii) a change in market conditions; and (iii) the fact that future operational results may not be accurately predicted based on this limited information to date. Except as required by law, the Company does not intend to update any changes to such statements. Caddy Stocks believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included herein should not be unduly relied upon. This article shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state. CaddyStocks.com, is owned by LeadGopher LLC, which is being compensated to conduct investor awareness advertising and marketing campaigns for some of the companies it profiles. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.