Issue link: http://resourceworld.uberflip.com/i/142113
BROK ER 'S P I C K S Derek W ood Golden Arrow Resources looking undervalued S ince the downturn in the junior resource sector began, one company that seems to have had a great deal of exciting news go largely unnoticed by the market is Golden Arrow Resources Corp. [GRG-TSXV]. The company released Phase I drill results from its flagship Chinchillas property, located in the Jujuy province of Argentina, in July 2012. The results indicated a near surface, silver-lead-zinc discovery with outstanding grades. The program consisted of 3,224 metres of drilling in 27 holes. A total of 26 of the 27 holes contained significant mineralization and the program certainly suggests that more drilling could progress rapidly towards an initial resource estimate. However, given the state of the market, the perception that the company would require further financing, which would likely result in significant dilution to the existing shareholders, was deemed a problem. In November 2012, the company decided to negotiate the sale of its 1% NSR on Yamana Gold Inc.'s Gualcamayo Gold Mine. The company completed the sale and received proceeds of $17.5 million, of which $16.5 million was received in cash. This allowed Golden Arrow to commence work on the second phase of drilling at Chinchillas. At the same time, the company allocated some of the proceeds from the NSR sale to conduct a normal course issuer bid. The company repurchased 24% of its issued shares for cancellation. Today, Golden Arrow has a relatively small share float with just 42 million shares issued, and no debt or warrants outstanding. Golden Arrow also still enjoys a strong cash position of approximately $10 million. After releasing a series of high-grade, near-surface results, a NI 43-101 resource calculation was published in May 2013. Golden Arrow's maiden resource calculation included 32.6 million silver equivalent ounces in the indicated category and 72.2 million silver equivalent ounces in the inferred category for a combined resource across all categories of 104.8 million silver equivalent ounces. This deposit remains open in four different directions. Phase III drilling, intended to increase the size of the deposit, is expected to start in the third quarter of this year. The company also intends to begin working towards a Preliminary Economic Assessment, expected later in 2014. The CEO of Golden Arrow, Joseph Grosso, has been described as a pioneer in the Argentinian mining industry. He has been active in the country since it opened itself to foreign investment in 1993. In 2005, Grosso was named Argentina's Mining Man of the Year. He recently stated "that the company will do whatever appears to make the most sense for creating shareholder value." Grosso further stated, "This could be by advancing towards pro28 www.resourceworld.com duction themselves, with the aid of a partner, or the outright sale of the asset." Golden Arrow also has a variety of other projects in their portfolio, including the Mogote Project which is joint ventured with Vale. The Chinchillas property has advanced very quickly. Golden Arrow appears to have the necessary capital to advance the story further without the need for additional financings. The company has a portfolio of projects at various stages of exploration, including the flagship Chinchillas property. Management has enjoyed past success in Argentina. Golden Arrow's current market capitalization is $12 million and the market appears to be grossly undervaluing the company's current advanced stage, as well as its upside potential. n Junior mining companies are speculative investments whereby significant loss of capital is possible and should be suitable for risk tolerant investors only. This article is solely the work of the author who is a registered investment advisor at Wolverton Securities Ltd. The views (including any recommendations) expressed in this article are those of the author alone, and are not necessarily those of Wolverton Securities Ltd. The information contained in this article is drawn from sources believed to be reliable but its accuracy and completeness is not guaranteed. This article is not to be construed as an offer to sell or a solicitation to buy any securities. The author of this article may or may not hold securities of the companies mentioned in the article. Wolverton Securities Ltd. is a member of the Canadian Investor Protection Fund. Derek Wood can be reached at 403-218-3580 or Derek.wood@wolverton.ca JULY 2013