In a recent interview of Mickey Fulp by the The Gold Report, Mickey discussed Goldgroup Mining, a portfolio company of ours which is completing a reverse takeover with Sierra Minerals (TSX: SIM). Mickey had good things to say about each company individually and moreso collectively.
Mickey Fulp: A company that I am a founding shareholder of is Sierra Minerals Inc. (TSX:SIM), which recently announced a reverse takeover (RTO) with privately held Gold Group Mining. Sierra is now a company that can build a mid-tier Mexican mining company. The current producing mine is Cerro Colorado. It just announced record quarterly production of about 6,400 ounces, projecting around 25,000-plus ounces of production this year. The company is now debt free and will be merging fairly soon with Gold Group Mining. They have the Cerro Colorado mine in production and have a high-grade underground resource at San Jose De Gracia in Sinaloa. They also have a 43-101 qualified resource at the El Porvenir high sulfidation play in Central Mexico. However, the real flagship property is going to be Caballo Blanco, another high-sulfidation gold system in Veracruz province that is a joint venture with Almaden Minerals Co. (NYSE:AAU;TSX:AMM). There is a resource and untested targets on that. I’m bullish on the Sierra Minerals and Gold Group Mining combination.
The Gold Report: Would you give us more information on Gold Group Mining?
MF: Gold Group Mining has some of the same management team that has been running Sierra Minerals. Gold Group has raised a significant amount of money in its private history and advanced two projects: San Jose De Gracia and El Porvenir. They did a deal with Lundin Mining Corp. (TSX:LUN) in the late fall for Caballo Blanco, which has significant upside potential for adding ounces. For a period of time, Gold Group Mining has been trying to put together the proper vehicle with which to go public and Sierra Minerals fits right into that. You’re basically rolling two companies that have some common interests and management, as well as shareholders, into a single entity. The new company will be called Gold Group Mining.
TGR: The currently public Sierra Minerals is acquiring Gold Group Mining and is switching to the Gold Group Mining name?
MF: It’s a reverse takeover. Gold Group Mining is basically acquiring Sierra Minerals as its public vehicle. Sierra is a small Mexican mining company, and now with this merger we can foresee the creation of a mid-tier mining company.
TGR: So has this reverse merger been priced into the stock?
MF: Yes, it has. There will be a rollback of Sierra Minerals on a per-share basis. With the pre-IPO financing of Gold Group Mining, the company will come out of the chute fairly valued for both groups of shareholders. With respect to the upside in the immediate term, I don’t really know what speculators may or may not do. But certainly you can play the new entity as a small producer growing into a mid-tier Mexican mining company.
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