Gatos Silver: The Cat Is Out Of The Bag

SomaBull
10.9K Followers

Summary

  • GATO just went public in November 2020, and since then it has gained over 40%.
  • There are several qualities about GATO that make it such an intriguing silver stock.
  • The valuation and upside remain compelling despite the recent surge.

Over the last few years, there haven't been a plethora of quality silver miners to buy. But a company has just emerged that I feel can be added to the shortlist.

Gatos Silver (GATO) just went public in November 2020, and since then, it has gained over 40%. I highlighted the stock for The Gold Edge subscribers just a few weeks after it IPOed, as the story is extremely compelling, especially considering the valuation. Despite the increase in market cap since then, GATO has plenty of upside potential. Below are all of the reasons that make GATO such an intriguing silver stock.

1. Cerro Los Gatos Is Fully Built And Reached Commercial Production in 2019

Gatos Silver has a JV on the Cerro Los Gatos (CLG) silver-zinc-lead-gold mine in Mexico. With its JV partner Dowa Metals and Mining (a Japanese company), Gatos constructed the $316 million mine, and it was completed on time and budget. In 2019, the mine reached commercial production but took a step backward this year due to COVID-19 (more on this in a bit).

Below are some of the pictures of the asset, which highlight the size and quality of the infrastructure. It's rare to come across a mining stock that is brand new to the market and has a fully constructed project. Most times, investors have to wait years before they will see a project begin to bear fruit. And the risk of dilution along the way — to finance the asset — is one of the main downsides for developers and why their stock prices tend to underperform during the construction phase. With Gatos, there are none of those risks.

(Source: Gatos Silver)

(Source: Gatos Silver)

2. One Of The Largest And Highest-grade Producing Silver Mines In North America, With Reserves At 641 g/t AgEq

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This article was written by

SomaBull
10.9K Followers
I’m a private investor with a strong track record of outperformance, and also currently work as a research consultant for high-net-worth clients who invest in the precious metals sector.My focus was mostly on Tech/Internet when I started investing, but almost 20 years ago I became extremely interested in the gold and silver sector as I anticipated a major bull run.I’ve been doing in-depth research on gold and silver miners since then. I'm familiar with their stories, their stock patterns, their highs and lows, their operations/projects, their successes and failures, their management teams and turnover at the top, and all other facets of these precious metal companies.This sector is my singular focus as I expect a massive bull market will unfold. These mining stocks are the cheapest they have been in over a decade, some in fact, are near multi-decade lows as they are oversold and significantly undervalued. I expect strong appreciation in these mining stocks as the bull market in gold and silver recommences. I believe in buying value, and not chasing the next hot stock. I use several basic investing principles, the main one being buying the balance sheet. I wait for opportunities to present themselves and then establish positions. I believe in doing your homework, and I have a very research intensive focus.*Disclaimer* I am not a Certified Financial Advisor. My research and articles should not be interpreted as a recommendation to purchase, sell, or hold any security at any time. The accuracy, completeness, or timeliness of the information posted in my articles is not guaranteed. Do not rely on any statement that I make in my articles. All readers and subscribers should always conduct their own research and should consult a professional financial advisor when it comes to making investment decisions.

Analyst’s Disclosure:I am/we are long GATO, EXK. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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