There is ample evidence for gold providing portfolio ballast during periods of rising inflation or geopolitical uncertainty, while still delivering strong capital appreciation to the tune of 10.9 per cent annually since 2020.
However, the real money is in gold stocks tied to miners in charge of advancing the metal to market, with emphasis on explorers, whose shares can ascend exponentially should they be lucky or skilled enough to discover an economical resource, as well as mine developers, whose shares can soar upon reaching production, validating project metrics and valuations established in economic studies.
In the newest edition of Stockhouse’s Weekly Market Movers, I’ll try to put this thesis to the test by analyzing two rallying gold stocks whose underlying companies pair discovery and development potential with tangible evidence, granting them a foot in the door for full-fledged due diligence towards a potential investment.
Dakota Gold
We begin with Dakota Gold, market capitalization US$452.18 million, whose flagship Richmond Hill oxide heap-leach project in South Dakota, located in the prolific Homestake gold mining district, is on track for commercial production as soon as 2029. The company is also delineating a high-grade underground gold resource at the Maitland project, also in the district, sporting discoveries geologically analogous to the historic more than 40-million-ounce Homestake Mine.
This article is disseminated in partnership with gold stocks Dakota Gold Corp. and Sky Gold Corp. It is intended to inform investors and should not be taken as a recommendation or financial advice.
Dakota Gold stock, sitting on a 20.75 per cent loss since 2020, is in the midst of a turnaround, managing an 83.11 per cent return year-over-year, outperforming gold’s 63.4 per cent effort, and it’s no mystery why.
Dakota began the year with a bang, delivering an initial resource estimate from Richmond Hill of 3.65 million ounces of gold and 38.09 million ounces of silver measured and indicated, representing more than US$15 billion in the ground at current prices, making it one of the largest development-stage oxide gold resources in the United States.
The company quickly tapped into the project’s prospects for resource expansion, drilling widespread gold mineralization announced in June, highlighted by 1.94 grams per ton (g/t) of gold over 60 metres, ramping up excitement towards an upcoming feasibility study to more accurately capture Richmond Hill’s economics.
Value-added news continued to hit the wire in July, with an S-K 1300 Initial Assessment Technical Report valuing Richmond Hill at US$1.6 billion after tax at a base-case gold price of US$2,350 per ounce, including low initial capital costs of US$384 million and low life-of-mine all-in sustaining costs of US$1,047 per ounce, as ongoing drilling vies to turn numerous higher-grade mineralized areas into bookable resources.
Additional high-grade intercepts round off positive news flow to date, substantiating share price momentum, including 1.50 g/t gold over 62.1 m in early September, 2.25 g/t gold over 33.4 m in late September, formally initiating metallurgical test work to inform project design, cost modelling and permitting, and 3.72 g/t gold over 20.5 m in October, as part of a batch of 32 drillhole results, which chief executive officer Robert Quartermain put into context in a recent chat with Stockhouse’s Ricki Lee. Watch the interview here.
With Richmond Hill’s feasibility study expected in 2027, Dakota fully funded to produce it, according to the latest investor presentation, and an abundance of exploration targets in the company’s purview to leverage gold holding steady above US$4,000 per ounce – almost twice the project’s base-case price – it’s reasonable to expect more high grades to drum up investor enthusiasm about the company’s near-term path to production.
Dakota Gold stock (NYSEAM:DC) last traded at US$4.06.
Sky Gold
Another rallying gold stock worth some deep though is Sky Gold, market capitalization C$5.13 million, a North American explorer advancing its Evening Star property in Nevada’s Walker Lane trend, which has yielded more than 50 million ounces of gold to date. Evening Star boasts multiple high-conviction gold and copper targets, including:
- The Tower target, measuring 1 kilometre by 200 m, backed by 65 rock samples yielding up to 18.21 g/t gold, 97.60 g/t silver and 1 per cent copper.
- The High Life porphyry copper, gold and silver target, featuring strong coincident soil and bedrock geochemical anomalies.
- The Gold Bug target, where drilling returned highlights of 12.2 m at 1.75 per cent copper, 3 m at 3.26 g/t gold and 5.3 m at 105.3 g/t silver.
The gold stock, giving back 86.46 per cent since 2020, has posted a 62.50 per cent return year to date, with the market responding favorably to leadership’s strategic moves towards harvesting exploration upside.
The company secured C$700,000 in flow-through financing in May and strengthened leadership’s geological expertise in September in anticipation of a fall drill program focused on the Tower and Golden Bomber targets, the latter returning up to 25.90 g/t gold, 318 g/t silver and 6.14 per cent copper in 2017 sampling.
Sky Gold proceeded to raise almost C$1.2 million in October to fund its exploration efforts, promptly initiating geophysical surveys to reveal subsurface structures at the project, with an induced polarization survey to follow to refine drill targets before an 1,100-m phase-one program.
Mike England, Sky Gold’s chief executive officer, sat down for an interview with Ricki Lee to confirm that drills are now spinning, with the High Life target added to the program’s focus, setting the stage for confirmatory mineralization.
Should grades and continuity match or exceed prospecting results, investors would be positioned for more potential returns leveraged to fluctuations in the gold price.
Sky Gold stock (TSXV:SKYG) last traded at C$0.065.
Thanks for reading! I’ll see you next week for a new edition of Weekly Market Movers, where I delve into companies that sat down with Stockhouse for an interview over the past week. Here’s last week’s article, in case you missed it.
Join the discussion: Find out what investors are saying about these rallying gold stocks on the Dakota Gold Corp. and Sky Gold Corp. Bullboards, and make sure to explore the rest of Stockhouse’s stock forums and message boards.
Stockhouse does not provide investment advice or recommendations. All investment decisions should be made based on your own research and consultation with a registered investment professional. The issuer is solely responsible for the accuracy of the information contained herein.
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