Investors have sought out gold for centuries as a hedge against inflation and to preserve capital during unstable economic times, but they are leaving potentially exponential returns on the table by ignoring junior gold stocks.
If you held the physical metal since it de-linked from the U.S. dollar in 1971 through March 2024, you would have earned yourself about an 8 per cent annual return, trailing only U.S. stocks, according to Statista, while comfortably outperforming average annual Canadian inflation of about 4 per cent over the period.
While 8 per cent per year offers reasonable compounding over the long term, a junior gold stock positioned to make a discovery can turn into a multi-bagger, rising in price by 10 times or more in a few short years, significantly expediting the fulfilment of investors’ financial goals.
Given the largest discrepancy between gold and gold stocks in more than 25 years, the former’s recent ascent to an all-time-high, and the latter’s history of outperformance after lagging periods, investors can take advantage of this generational inflection point today by identifying quality explorers creating shareholder value yet to be recognized by the market.
An unfairly pummeled stock to bring this thesis to life is Quimbaya Gold (CSE:QIM) (OTCQB:QIMGF), market capitalization C$12.82 million, a junior gold miner active in Colombia, whose case for undervaluation is supported by:
- A three-project, 59,057-hectare portfolio with demonstrated prospectivity in Antioquia, the country’s premier mining department, which is responsible for more than half of its gold production.
- A management team that has proven itself capable of identifying exploration upside with the potential for transformational discoveries and significant shareholder value creation.
- The properties being de-risked by a cash and stock deal that will see Independence Drilling, Colombia’s largest driller, accept cash and up to 50% of the contract in equity, and break ground on its properties in Q3 2024.
Let’s begin our analysis of why the junior Colombian gold stock is ideally positioned to maximize leverage to soaring gold prices with a look at its strategically located portfolio.
The Tahami Project
Quimbaya’s flagship 17,087-hectare Tahami Project in northeast Antioquia resides among concessions with a rich gold mining history dating back to the mid-16th century. The project is host to multiple gold and silver occurrences near the regional-scale El Bagre fault and is adjacent to three noteworthy neighbours suggestive of the shareholder value to be generated from initial exploration later this year:
- Aris Mining‘s Segovia Mine, the world’s highest-grade gold mine, which produced about 220,000 ounces in 2023, more than 88,000 ounces in H1 2024, and houses approximately 3.6 million ounces in reserves and resources grading 14.3 grams per ton (g/t) of gold. Aris, market cap C$1.07 billion, is investing US$15 million to expand throughput capacity by 50 per cent, which will enable production of 300,000 ounces per year.
- Soma Gold‘s Cordero Mine, which yielded more than 32,000 ounces in 2023 and is expected to hit 30,000 ounces in 2024, with drilling ongoing to extend the mine-life well beyond its current end date in early 2026.
Tahami backs up its high-grade company with rock grab samples of 5.86, 4.99 and 3.94 g/t gold, as well as more than 100 g/t silver, in addition to the presence of more than 25 historical mines supported by historical rock channel sample assays grading 15 to 26 g/t gold.
The Berrio Project
The junior gold stock’s 8,746-hectare Berrio Project in Antioquia’s Low Magdalena Region operates in an area with more than half a century of medium-scale mining activity.
The project’s high-grade potential is supported by historical drilling campaigns with intersections as high as 98 g/t gold, including a highlight of 16.3 m grading 11.15 g/t gold, in addition to ongoing production at an adjacent project yielding 5,000 ounces of gold per year at a grade of 8 g/t.
The Maitamac Project
Quimbaya’s 33,223-hectare Maitamac Project, only 65 km south of Medellin in the municipalities of Abejorral and Sonson, is near numerous high-grade gold mines and features several gold showings untouched by systematic exploration.
Maitamac’s most impressive exploration results include surface rock samples as high as 3.2 g/t gold and stream sediments in excess of 1 g/t gold. The project’s most impressive neighbour, Prudent Minerals, has identified quartz-vein-hosted mineralization at its ABE Gold Project along a 30-m-wide corridor spanning more than 2 km. Mineralized shoots from the area averaged 26 g/t gold, with a highlight grab sample of 96 g/t gold.
Management signalled its strong conviction in upcoming drilling at Maitamac by expanding the property by almost 7,400 hectares in January, enhancing its access to numerous demonstrated prospects, including:
- The Cauca-Romeral fault zone, which is favourable for gold.
- The El Buey Stock, an intrusive body associated with skarn-type deposits.
- The area’s long history of alluvial and small-scale gold mining.
Before delving into Quimbaya’s value-added management team and its multi-bagger case for undervaluation, let’s go over the deal that will enable the junior Colombian gold stock to validate its portfolio’s prospectivity.
Independence Drilling’s skin in the game is Quimbaya’s competitive advantage
Quimbaya and Independence Drilling signed a five-year contract covering 100,000 m of drilling across the junior Colombian gold stock’s project portfolio.
The driller brings more than 40 years of experience in the Colombian market, working with the likes of Ecopetrol, Glencore, Zijin, Continental Gold, Frontera Energy, Parex Resources and NG Energy. It currently operates 47 rigs serving the country’s oil and gas, mining and water industries.
For the first time in its history, Independence Drilling will accept partial payment in shares (up to 50% of contract) under its deal with Quimbaya, after rigorous due diligence on management skill, the likelihood of a discovery and subsequent value creation.
The partners will drill a first campaign of approximately 5,000 m in Segovia, contiguous to Aris Mining, beginning in Q3 2024 and are currently delineating targets. The first drilling campaign is expected to be completed by year end.
Independence’s expertise spans Colombia’s unique geological, social and regulatory environments, and will serve to accelerate exploration efforts driven by Quimbaya’s highly aligned management team, which owns 65 per cent of shares outstanding.
Management with money on the line
Quimbaya’s management team has spent decades in the Colombian mining industry and is well-versed in maneuvering the capital markets as a junior resource company. Let’s meet the company’s top executives now:
Corporate Management
- Alexandre P. Boivin, director and chief executive officer, brings more than a decade of experience in Colombian mining, including raising capital for early-stage companies, as well as managerial roles in project development, exploration and production. Boivin owns 31.2 per cent of Quimbaya, according to data from Simply Wall Street, representing a more than C$4.2 million investment.
- Olivier Berthiaume, chief financial officer, CPA, specializes in early-stage venture companies in Canada. His more than 12-year track record spans private-to-public market transitions, compliance and numerous director or officer positions at other private or CSE-listed corporations.
Colombia Team
- Fernanda Martinez, senior geologist, has more than 10 years of experience working for Agnico Eagle, Eco Oro and various state-owned mining ventures.
- Angel Meza, manager, is a mining engineer with more than 24 years of mine management experience across Colombia, Guyana, Peru and Africa, including work for Glencore and Minas Buenaventura, as well as a five-year tenure at Aris Mining, where he served as general manager at the Segovia mine contiguous to the Tahami Project.
The junior Colombian gold stock’s key leaders are complemented by a board of directors and advisory board with mining, managerial and capital-raising pedigrees fit to withstand any part of the mining life-cycle:
Board of Directors
- Juan Pablo Bayona, executive chairman, is an economist with more than 30 years of management experience, including corporate finance and capital markets. He raised more than US$1 billion in capital as head of Barings for Colombia and Peru, and founded SMYLE SAS, an anthracite mining company that successfully traversed the Colombian licensing and permitting process.
- Bill DeJong, director, is a lawyer specializing in securities and capital markets centred on the mining and energy industries. His more than 10-year career has seen him serve as in-house counsel and a corporate development professional for listed companies on multiple stock exchanges.
- Juan Sanchez, director, brings 10 years of experience in management roles across mining, commodities, trading and financial services in Europe and South America. He currently serves as country manager in Colombia for the Swiss trading company Open Mineral AG.
- Pietro Solari, director and secretary, has built a 40-year career in private banking, investment banking and corporate finance with the likes of Bank of America, Rothschild and Merrill Lynch. As a venture capitalist, he serves on various boards and played a significant role in raising seed capital for Quimbaya.
Advisory Board
- Francois Goulet, technical consultant, is the former CEO of Harfang Exploration and a registered geologist with the Ordre des géologues du Québec. His expertise includes international mining projects across tropical and northern environments. He also serves on the board of the Quebec Mineral Exploration Association.
- Dr. Stewart Redwood, BSc (Hons), PhD, FIMMM, QMR, FGS, FSA Scot, is a highly accomplished geological consultant with over 40 years of experience in gold, silver copper, zinc and tin mineral exploration and economic geology specializing in epithermal, porphyry and skarn deposits, particularly in Latin America and the Caribbean. Dr. Redwood’s career is marked by his leadership roles in several prominent mining and exploration companies. He has held key positions such as chief geologist for Latin America at Anglo Gold Ashanti, founder, president and CEO of Goldquest Mining, and vice president of exploration at Colombia Goldfields (merged with Gran Colombia Gold), among others.
- Nicolas Lopez is a Colombian native with over 28 years of experience focused in the mining district of Antioquia. He is currently the CEO of Mining Brain SAS, a consulting company advising on the implementation and development of sustainable mining projects all over Colombia. Prior to Mining Brain, Lopez spent 12 years as Colombia & Nicaragua’s country manager for IAMGOLD, having devoted the previous 10 years with Mineros SA as head of exploration & geology. Lopez has played a pivotal role in major discoveries, including the first porphyry copper-gold deposit in the Colombian middle Cauca belt, known as Titiribi.
- Juan Ricardo Sierra, B.Sc., MAusIMM, is a vetted geologist with over 18 years of exploration experience in Colombia, Chile, Cuba and Brazil specializing in orogenic, mesothermal and porphyry-type deposits, as well as epithermal and stratabound systems. Sierra started his career with Anglo American as an exploration geologist in greenfield and brownfield exploration, supervising diamond drilling on its Colombian properties. His knowledge of vein systems, critical in understanding mineralization processes, was honed as exploration superintendent with Continental Gold (now Zijin Mining Group) on their Buritica (Antioquia) deposit, as well as in its regional exploration efforts in Choco, Nariño, Cauca and Antioquia.
Quimbaya’s leadership, well-versed in the technical foundations behind economical resources, has been optimally assembled to exploit the company’s multitude of substantiated prospects and gold’s historically wide separation from gold stocks, setting investors up to capitalize on a significant re-rating opportunity.
Quimbaya Gold ticks all the boxes for seasoned junior mining investors
Quimbaya shares are at odds with its project portfolio’s upside potential, its Tier-1 drilling partner and management’s proven ability to create value from prospect to discovery.
An investment today grants you exposure to a high-quality operation at a depressed price, and positions seasoned investors who can recognize the conviction Quimbaya is worthy of to reap outsized returns upon a discovery, which is likely to prompt more deals like the contract with Independence Drilling and pave the way for long-term value creation.
At a tight 30.5 million share count, there is still time to build a position before drilling gets underway and positive news flow – including new mining title acquisitions announced on June 3 and June 17 – closes the gap between fair value and market perception.
Join the discussion: Find out what everybody’s saying about this junior Colombian gold stock on the Quimbaya Gold Inc. Bullboard, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Quimbaya Gold Inc., please see full disclaimer here.
(Top photo of CEO Alexandre P. Boivin (centre) and his team examining mineralization at the Tahami Project: Quimbaya Gold)