G Mining Ventures: High FCF Likely After Near-Term Gold Mine Ramp-Up

Family office investor Samir Mohamed presented his investment thesis on G Mining Ventures (Canada: GMIN) at Best Ideas 2024.

Thesis summary:

G Mining Ventures is close to commercial production on a gold mine in Brazil, with projected all-in sustaining cost (AISC) of USD 681 per ounce, far below the industry average. The company reached 71% project completion in November 2023 and plans to start production in the second half of 2024. Franco Nevada, the biggest gold royalty and streaming company worldwide, is a major investor. The founder and CEO of GMIN is from a Canadian family with an excellent track record building large gold mines in South America.

Using a discounted cash flow model with the mine parameters forecasted by the company, a gold price of USD 2,000 per ounce and a 10% discount rate indicates 140% upside by H2 2024 at a closing share price of 1.38 CAD on December 18, 2023. Given the high free cash flow from its first mine and the option to use royalties or streams for financing, the company could add several more mines in five years without issuing more equity.

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About the instructor:

Samir Mohamed started with value investing in 1999 and manages a private family fund, full time since 2016. He focuses on good businesses with temporary problems and suppressed stock prices. Samir enjoys collaborating with other value investors regularly via in-person meetings or Zoom calls. He was global head of the product management teams of a 170 Mio. EUR industrial business at Siemens. He worked at Siemens for 13 years. Samir has a master’s degree in Management, Technology, and Economics and a bachelor’s degree in material science, both from ETH Zurich. He is based in Bangkok, Thailand.