Sarama Resources (SWA on the TSX-V in Canada)
*UPDATE - Please note that I have added significant details at the very bottom of this article page, in the 'discussion' section. Anyone can post their own thoughts/questions here. I will continue to update this article page as the company progresses.
Video Notes & Links
1 minute 10 seconds -
March 2016 - Sarama Resources Latest Presentation. Overview of Management. While the company is poor on marketing, they have HUGE credibility, growing one of the great gold discoveries of last decade in what is now the Kibali Gold Mine, jointly owned by Randgold Resources and AngloGold Ashanti. While marketing is perhaps the company's biggest weakness, it means that there's been a better chance to buy shares cheaply if the company is actually making real progress. This has been my view for the past 2 years.
2 minutes 45 seconds - As a typical retail shareholder, I LOVE to see companies minimize dilution by raising money at a premium to the market share price. That is exactly what happened at the end of 2015 during the last raise.
3 minutes 30 seconds - Sarama's 5-year stock chart on Yahoo Finance using the SWA.V ticker. I was very lucky with the timing of my initial purchases in late-2014. However, I have continued to purchase shares throughout 2015 & early-2016. I consider all of my purchases to be great value.
4 minutes 35 seconds - The blockbuster JV announcement on US Thanksgiving Day in 2014. You can read more about it with this fine article from The Northern Miner. I strongly believe that fewer people were aware of this deal because Acacia Mining re-branded on the same day as the announcement. In a way, this has been an opportunity to buy cheaply.
5 minutes 40 seconds - Emphasizing that Sarama is still in control of the South Hounde Project (the JV with Acacia Mining). Anyone who believe Sarama is already a minority shareholder is WRONG. This is very important, as Sarama has options and downside protection if Acacia pulls out of the deal after 2016. BUT, we are hoping Acacia follows through on the deal going into 2017 & 2018, as it implies that this could become a monster deposit.
6 minutes 55 seconds -
December 11, 2015 - Acacia Mining Exploration Roundtable Presentation. Our interest starts at page 17.
8 minutes 0 seconds - The news release for the most recent 2.1M oz inferred resource.
9 minutes 0 seconds - I believe that the South Hounde Project (the JV with Acacia Mining) is conservatively valued as roughly the same as the current market cap for Sarama (which is ~10M CAD at a 0.105 CAD price/share). It is easily Sarama's #1 project. This means that ALL of the other projects are icing on the cake. Few people know them, and they are mentioned below.
9 minutes 15 seconds - You can research ALL of Sarama's news releases for yourself here.
9 minutes 25 seconds - Sarama now owns ~6.6M shares of Aureus Mining. Based on a phone conversation with Andrew Dinning last month, I believe Sarama currently has ~$400,000 USD in the bank, perhaps a bit more (this can be verified with the next release of financial statements). The burn rate is ~$80,000 USD/month. This means that Sarama has to look to raise more money by the summer of 2016. HOWEVER, those shares in Aureus Mining are current worth an additional ~$500,000 USD. They can be sold if needed, or held for the potential upside. This is a clear example of Sarama monetizing a project, and did not require dilution of shareholders to help keep the company moving forward.
[*UPDATES July 26th, 2016 - These updates comes late. Sarama sold the shares in Aureus Mining for ~$270,000 USD a few months ago. This was confirmed in a SEDAR financial statement footnote. This was less than expected because of various problems Aureus has had in 2016, but better than nothing.
More importantly, Sarama completed a successful financing for ~$2,300,000 CAD at the end of June. This is EXCELLENT news. I recently confirmed with Andrew Dinning that the burn rate is still ~$80,000 USD/month. In addition, there are plenty of warrants/options that are in the money and could be exercised at any time. Sarama now has a comfortable cash cushion and does not need to raise money for at least a year.]
10 minutes 20 seconds - While little work has been done, this is a very enticing land package in Mali, surrounded by potentially interested companies. Few people are aware of this, and the market does not give it value.
10 minutes 45 seconds - In Burkina Faso, this is another land package that is suddenly more interesting. That's because the Youga Mine has a new owner. Again, few people are aware of this, and the market does not give it value.
11 minutes 15 seconds - The Banfora Belt Project. A slide is included on page 22 of the latest Sarama Presentation. This is likely Sarama's #3 project in terms of current value, and could become much more interesting by the end of 2016. Very few people are aware of the Ausquest/SEMAFO JV, with recent results seen on page 21 of a recent Ausquest Presentation. Again, the market does not currently give Sarama's land position here any value.
11 minutes 45 seconds - The JV with Savary Gold, currently Sarama's #2 project. You can see some of the middle slides here for more visuals.
12 minutes 40 seconds - Comparison of Sarama Resources Market Cap (~10M at 0.105 CAD price/share) with Savary Resources Market Cap (~12M at 0.085 CAD price/share). It does NOT make sense to me that Savary has higher market cap, let alone an equal market cap. After listening to all of this, I would love to hear ANYONE justify buying shares in Savary Gold, but not buying any in Sarama Resources. I currently own far more shares in Sarama than Savary, because of the reasons presented in this video/article.
13 minutes 35 seconds - OK, the best reason I can come up with on my own: Perhaps Savary Gold shareholders put HUGE value on Ross Beaty owning ~20% of the company (and even more if warrants are exercised in the future). Still, Sarama has excellent management and a strong Board of Directors. And many, many interesting properties, vs. just one for Savary (that Sarama currently has significant exposure to).
14 minutes 0 seconds - Sarama first batch of drilling results imminent. Sarama has some of the BEST catalysts over the next few months. Drilling results soon for the Acacia JV. Even more drilling results later this year (as part of a ~4.7M CAD 2016 program, fully funded by Acacia Mining). But Sarama has significant exposure to Savary's drill program as well, expected in Q2. These are at least 3 separate drilling events, with expectation of at least 3 drilling results NRs. It's hard for me to find a tiny gold exploration company with better catalysts in the near future.
[*UPDATE July 26th, 2016 - This update comes late. Sarama acquired the Bondi deposit from Orezone in May. This was completely unexpected and EXCELLENT news! Details are in the news release. In short, Sarama became the clear 'leading junior' in this emerging gold district after this announcement. The gold already discovered at Bondi by Orezone is likely economic at these gold prices, and it was acquired more cheaply than Sarama could have discovered it on their own. Truly a great update. Sarama is trading above 0.30 CAD/share as of July 26th. Things have been going incredibly well for the company since this video/article was created just over 3 months ago in April.]
All errors are my own and will be corrected as needed. Please discuss below! If you have private questions or comments, please email me at: email@example.com
*DISCLAIMER: I, MiningBookGuy, am not a financial advisor. This is not Investment Advice. This is for educational purposes only. Please note that I own shares in Sarama Resources (SWA on the TSX-V in Canada) and Savary Gold (SCA on the TSX-V in Canada). [*UPDATE July 26th, 2016 - I no longer own shares in Savary Gold, but could buy again in the future]. I am biased towards both companies. I may buy or sell shares in the immediate future for these companies or any others. These companies are highly speculative and not suitable for all investors. Any errors presented are my own. Please do your own research (DYOR).