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Treasury Metals: Goliath Stirring


  • Treasury Metals to acquire the Goldlund project.
  • ...at a very reasonable price.
  • A long-awaited, and highly accretive move for Treasury Metals.
  • This idea was discussed in more depth with members of my private investing community, Itinerant Musings. Get started today »

Treasury Metals (OTCQX:TSRMF) has just announced a move that will most likely accomplish what we predicted three years ago: namely, bring the company back into fashion with resource sector investors. Granted, little did we know the wait would be quite as long when we wrote the linked article back in 2017; but given the long-anticipated deal the company has just announced, there is finally a reason to re-visit this gold development junior.

Treasury Metals has been developing the Goliath gold project 20km east of Dryden in Northwest Ontario since the company was spun out of Laramide Resources (OTCPK:LMRXF) back in 2008. The 2012 PEA was not received with much enthusiasm by investors, and for good reason as the proposed project revolved around a large open pit with a very high strip ratio. It wasn't until Chris Stewart's leadership that this open pit was scaled back, and the underground portion emphasized instead. The 2017 PEA represented an important milestone to this regard, and incidentally triggered our interest in the company and the Goliath project. This PEA assumed production of ~100,000 ounces of gold per annum over a mine life of 13 years. The economic analysis in this report assumed a gold price of $1,225/oz and documented a post-tax NPV(5%) of C$306M and an IRR of 25.1%. At today's gold price the IRR would print north of 40% -- a highly attractive project in a highly desirable jurisdiction.

Mr Stewart's intentions of putting Goliath into production were short-lived and he left the company without too many friendly words exchanged. Comparatively little development activities have been performed since then; and one might speculate that the new CEO was more dedicated to his other job as VP Investor Relations at Laramide Resources. And even though Treasury Metals seemed to be slipping into obscurity, we couldn't quite

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This article was written by

Itinerant profile picture

Itinerant is an engineer with over 30 years of international work experience and deep connections in the mining sector. He holds a PhD in engineering. Itinerant covers the resource sector, with a focus on precious metals, base metals and energy stocks of all sizes. His research explicitly includes small and micro-cap juniors, and he tries to manage the associated risks in a methodical manner.

He leads the investing group Itinerant Musings where he offers: Exclusive research on mining and energy metals stocks, access to his personal portfolio, real-time trade alerts, a network of industry contacts, community and author discussion via 24/7 chat, archived legacy Pro articles, and more. Learn More.

Analyst’s Disclosure: I am/we are long TSRMF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (30)

Hi, is it worth adding TML at current price or still very speculative?
Itinerant profile picture
@sami92200 little has changed since this article was published, I'd say.
@Itinerant Yes, TML is even more undervalued, it seems to me!
TML's current capitalization represents US$4.99 per ounce of gold (2.964 M) and 5.97% of the NPV for gold at 1,750. If we deduct the 8 M in cash, we get $3.00 per ounce and 3.59% of NPV.
But I don't see a short-term catalyst. I'm surprised that at this price, TML isn't yet the target of a takeover, but I'm afraid for shareholders that it's far too low a price!
@andre171 Thank you for your answer. I added at this price even thoguh I don't see how they can finance their project at current valuations. In fact, all these developpers have a lot of difficulties to find money unless gold goes to 3000$.
If cash is deducted, TML is valued at US$7.06 per ounce (Measured and Indicated + Inferred) and it is likely that new discoveries will add to the resources fairly quickly. What do you think?
Darp Research profile picture
@Itinerant Any thoughts here in 2022. Just bot tiny amount to keep an eye on it.
TML today reports strong drilling results for Goldlund. Do all these positive results published since the PEA of February modify your opinion on TML? The price is currently at its lowest, like many other mining companies! I hesitate between TML, ITRG and AUN, all three promising it seems to me!
The last presentation of TML contains a comparison with Atlantic gold. From the geographic and geological considerations on page 10, should we not first remember that Atlantic Gold had a NPV @ 5% of 527M for 72M for TML (for gold at $ 1300) or 7 times more. Of course, improvements are being considered, but the disappointment of the February PEA calls for caution and at least forces one to realize that at the current stage TML has a smaller production profile and much less profitable than Atlantic. What do you think ?
Itinerant profile picture
@andre171 The comparison with Atlantic Gold makes little sense to me, for several reasons. The project presented in the PEA is flawed; I don't think this project will be built anywhere near as described in the PEA.
@Itinerant May I ask you what are the errors and shortcomings of this PEA?
Itinerant profile picture
@andre171 Treasury Metals has a 65km long land package, and the mill is located at the very southern end of this package. The PEA calls for trucking of 21M tonnes of low-grade ore 25km to the processing plant. There are currently 3M tonnes of high-grade ore located proximal to the plant. I couldn't find a quote for trucking costs in the PEA but you can work it out - it comes to around C$4/tonne, or around C$125 per ounce sourced from the Goldlund open pit. If you put the mill at Goldlund instead of Goliath you could save around C$100 per ounce just in trucking cost. This will get even worse if they can find economic resources at Miller, or at any prospect even further to the North.
The reason they are putting the plant at Goliath is permitting, but it sure doesn't make sense economically.
43-101 has just been published.
The decrease in content (more than half for Mes + Ind and 346% for Inf) leaves me perplexed. Should we deduce from this that the previous PEA was not serious ?
Bad PEA today. I find the PEA published today very disappointing. The NPV @ 5% of 328M. is barely higher than that (306M) of the PEA of 2017 for the only Goliath mine whereas the price of gold went from 1225 to 1600 (+ 30%). At the same price of gold of 1200 $, the NPV @ 5% would have fallen to 47M for the whole - We can doubt the advantage of adding Goldlund + Miller!

The gold recovered of 1064M for the Goliath + Goldlund + Miller set is particularly low!
See new presentation under this link and more especially page 15 which suggests a strong under evaluation compared to peers!

PEA will be communicated in January and could result in a much better valuation of the Goliath + Goldlund set!

TML announces new drilling results for Goldlund:


Are these results good and encouraging?

What can be deduced from the finding that these results go against the conventional theory, drawn from previous exploration work, that the Goldlund mineralization is mainly associated with granodiorite?
Do you have an AISC estimate for the new Goliath + Goldlund package?
Chancer profile picture
Price up a lot in less than past 30 days. On May 14 was US$.18. Now US$.30
Thank you for this very interesting publication.
1) -For Goliath, the 2017 PEA set gives a 5% NPV of 306M for a gold price at $ 1,225 per ounce. At the current price of $ 1,700 and the CAD / US $ rate, the NPV should almost double.
For Goldlund, there is no PEA and VPN calculated yet, but you may have been able to estimate it. Do you have an NPV rating for the new TML + Goldlund, taking into account the synergies between the 2 projects and economies of scale?
2) -Besides, the resources indicated by Goldlund are they not 809,200 ounces?
Itinerant profile picture
re: 1) I don't think it's appropriate to guesstimate the NPV of the combined project at this point in time. This needs serious work, and any number thrown out at this point in time has very little relevance in my view. I do however expect a significant improvement for an already attractive project.
re: 2) I used the numbers from the 2017 estimate, rather than the 2019 estimate.
Based on your estimate at 50M. CAN, don't you think that the price is better than fair for TML, that it is very advantageous since it corresponds to less than 62 CAN per measured ounce and less than 30 CAN per total ounce of resources for a comparison at 116 and + - 70?
We are almost half, while the price of gold is more favorable!
Itinerant profile picture
As always you could choose other comps and tell a different story. But at the end of the day, it's a good price in my view, with plenty of scope to add value.
Bruster profile picture
Good article and the inclusion of the first mining deal. Took starter long position a year+ ago sitting on 26% loss. Stock and company have gone nowhere. Fortunately the greater fool (as in the greater fool theory) First Mining has provided some future hope. I will continue to hold for now.
Greg Ferron profile picture
I have not worked at Laramide for 18 months. The focus and mandate was to complete EA on Goliath(done), expand resource and longer term exploration potential along strike (done IP, soils), advance PFS (almost done) and complete regional consolidation (done).
Itinerant profile picture
Congratulations on the deal, @Greg Ferron . Very well done.
well Mr Ferron...
Although I was initially not happy about it (I thought you overpaid for Goldlund) but I failed to see the complete picture. This deal's synergies should suffice to bring an open mine. The sooner, the better. Hopefully you can do a fine to to deserve a permanent role as CEO. We have been waiting for a long time and this is the first solid move in more than two years. Keep exploration rolling as well... :)
Thanks Itinerant for an excellent article. Looking to add to my position as well
Since the operation, the TML share price has gone down from 0.34 to 0.58 so that the price of Goldlund is increased by more than 31M.
Can we still consider that the recovery price was advantageous, that TML was a winner in this recovery?
With the cash payment of 5M and NSR of 1.5%, the price would approach 100M or 123 per ounce measured !
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