Loading ...Fortunately a lot of this concern is built into the stock. The shares are down 17% for the year and they are down about 25% since I wrote about the company in November. Furthermore short interest is a whopping 36% of float. The reason for this is that the company is highly leveraged to the gold price given that its costs include not just its production costs but its financing costs, and this increases its effective cost of production to a point near the current gold price. Given the company’s meager $307 million valuation versus its production capacity of over 250,000 ounces even a small increase in the gold price radically changes the company’s cash-flow potential relative to its market capitalization making it an ideal leverage vehicle for gold bulls. But until the company de-risks its portfolio by either de-leveraging or by finding a JV partner for its ambitious Hycroft expansion plan I don’t see the appeal beyond this optionality.
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