Bullfrog Gold Corp (OTCMKTS:BFGC) is a junior gold miner with potentially huge prospects right now. Investors are saddled with a need to fill out their 2017 portfolios with greater exposure to inflation hedges given a rational set of expectations for policy change under the new incoming presidential administration. That’s no secret. Infrastructure stimulus and tax cuts coming at full employment with interest rates at nearly 0%? That’s a potential inflation bomb waiting to happen.
But filling out that side of the equation isn’t easy. Physical gold, TIPs, TBT, real estate. These are all good options. But one of the most explosive possible directions one may take is in the junior gold miners. That’s often where the truly jaw-dropping returns can be found in this type of market context. There are a number of options when it comes to junior miners. Prior leaders like Alamos Gold Inc (US) (NYSE:AGI), IAMGOLD Corp (USA) (NYSE:IAG), and Pretium Resources Inc (NYSE:PVG) offer clear potential. But one might want to look for a new guard to lead this time around.
Bullfrog Gold Corp (OTCMKTS:BFGC) promulgates itself as a company focused on the exploration and development of its Bullfrog gold Project located 120 miles NW of Las Vegas, Nevada, where Barrick Bullfrog Inc. (Barrick) produced 2.3 million ounces of gold averaging 2.8 g/tonne from 1989-1999.
The Company also acquired Barrick’s comprehensive exploration, mining and processing data base, including information on 157 miles of drilling in 1,298 holes. For reference, Barrick ceased operations in 1999 when the price of gold was less than $300/oz. BFGC has identified 470,000 ounces of gold mineralization remaining between Barrick’s Bullfrog underground and open pit mines and in the M-S pit area.
Prepped for Success
One of the reasons we are interesting in Bullfrog is its low-cost accessibility to new production.
In a smart move, the company acquired access to Barrick’s entire data base in the Bullfrog mining district of Nevada, including 157 miles of drilling in 1,298 deep drill holes that would cost over $40 million to recreate today. That looks like it will turn into 470,000 ounces of heap leachable gold mineralization without the cost of the drilling.
The company also retired over $3 million in debt during the gold bear market, freeing up capital resources and reducing risk of dilution in seeking funding for further expansion of capacity. In a gold upswing, the ability to take full advantage of higher margins on production starts with that capacity and the degree to which new capacity can be added without risks to the cap table.
BFGC is in prime position to do just that, according to our analysis.
The stock is starting to see increasing attention, but still flies below the radar at just $0.10/share. That suggests this might be a rare opportunity. As noted above, there are many macro forces pushing in an inflationary direction at present. BFGC is situated in an interesting position relative to its peers to deliver a unique ROI on current capital as long as gold is trading above the broad industry cost of production.
Moreover, because the company managed to expand its overall production capacity through timely strategic acquisitions, such as the Barrick deal, the downside risk for investors during any further near term weakness in the spot price of gold is less threatening.
BFGC looks like a junior miner worth including on your focus list at present.