With an historical million-ounce resource in the backyard of the world’s two biggest gold companies, Golden Independence Mining (IGLD.CSE) seems wildly undervalued.

But that could change, and fast, as the drills begin to turn to grow that resource, bringing it into NI-43-101 compliance and moving it toward production.

Dear John,

Sometimes investment bargains fall into your lap.

That certainly seems to be the case with Golden Independence Mining (IGLD.CSE).

This company has flown below the radar, even though it has an open-pittable gold resource in Nevada, a mecca for global gold production.

Consider this: Some Nevada-based gold exploration companies without even a resource to their credit are currently trading as much as 10 times Golden Independence’s market valuation.

It’s a valuation gap that seemingly has to close, and soon, given all that the company’s flagship Independence gold project has going for it.

Simply put, this is a company that, in a matter of months, will have an established, million-ounce resource that could easily grow more than 50% larger.

Better still, it’s in the backyard of the Barrick Gold-Newmont Gold joint-venture, now called Nevada Gold Mines, which gives the Independence project a clear path to production…and makes it a compelling takeout target down the road.

A Million-Ounce Project In A World-Class Jurisdiction

The Independence project’s location in Nevada is a major coup in its own right.

As the graphic below indicates, the state is one of the world’s largest gold mining districts, accounting for fully 70% of U.S. production.

In a world where countries are starting to nationalize gold mines away from miners, the chance to work in a safe, mining-friendly jurisdiction is a huge advantage.

Operating in Nevada, particularly along one of its major trends, gives a company access to world-class mining infrastructure and a skilled workforce.

Unlike gold projects in far-flung parts of the world, Independence’s location along the Battle Mountain Trend gives it a clear path to becoming a producing mine.

Inside The Backyard Of Gold’s Two Biggest Players

That’s especially true given that the project lies within the permitted area for Nevada Gold Mines’ Phoenix mine complex.

Nevada Gold Mines formed so that Barrick and Newmont could optimize production from their shared gold mines in the state.

And, as you can see from the map below, Golden Independence’s project lies squarely within the permitted boundary of NGM’s Phoenix operation.

A key benefit of that address is that NGM has already permitted the entire area around the Phoenix mine — inclusive of the ground covering the Independence project.

Having those permits in place will shave years off of Golden Independence’s mine construction timeline, assuming it decides to put Independence into production.

Better still, with active, open-pit mining ongoing right next to its project, Golden Independence has an obvious takeout suitor if it can prove up a sufficient resource.

Cashed Up And Ready To Drill

A 12,750-foot program to do exactly that at Independence is just about to get started.

Golden Independence recently raised C$4 million in an oversubscribed private placement that will fund the drilling needed to bring the project’s gold resource into NI 43-101 compliance.

As it stands, the project already boasts a large, 1.1-million-ounce historical resource…and it comes with more than 200 holes of prior drilling data, including 65 holes drilled outside the known resource area by recent operators that could make growing the resource a layup.

While an historical resource doesn’t meet current reporting standards and the company will be quick to point out that it can’t be relied on, it is a valuable indication that gold is there to be proven up to modern standards.

And Golden Independence is about to do just that: The company plans to drill this fall and winter with results expected before the end of 2020 with the ultimate goal of generating a firm, compliant resource estimate for the project in early 2021.

Thus, in just the next six months, the company has the chance to earn a re-rating simply by reminding the market that Independence’s gold resource sits in NGM’s backyard.

A Glide Path To Production

With a drum-tight share structure, a drill program about to begin and a preliminary economic assessment due out by the end of 2021, Golden Independence Mining is primed to multiply in value as the gold bull market marches on.

The company’s veritable glide path to production gives it many ways to win:

• The drilling program could remind the market that Independence has a potential million-ounce resource within a Nevada open-pit mine property boundary.

• All by itself, that market awareness could spur a re-rating, as investors realize that comparable companies, with little or no resources, are trading at multiples of Golden Independence’s current market capitalization.

• Between the historic data and the upcoming drilling data, the company has a clear path to grow Independence’s resource, providing yet more impetus for a higher valuation.

• Independence’s proximity to a working gold mine gives it a permitting advantage over competitors — with a portion of its resource that’s near surface and open-pittable, the late-2021 PEA could well encourage a takeout bid.

By late next year, Golden Independence will find itself with an NI 43-101 compliant resource with an open-pittable component right next door to NGM’s Phoenix mine.

Golden Independence’s current market cap is just C$14 million (US$10.5 million).

If the company can prove up the historical resource to current regulatory standards through the upcoming drilling, that value would have to multiply many times over to merely equal its peer group.

That’s why you’ll want to act quickly — with drills turning and a clear path to production, Golden Independence is a rare market bargain that isn’t likely to last.

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