I identified Bonanza Gold (BONZ) when looking for a way to take advantage of the prices of Gold and Silver through a junior mine. Gold and Silver prices have been skyrocketing lately based on inflation that the USD is seeing and will continue to see as the government pours more money into the economy as COVID relief efforts.
About the Bonanza Gold (BONZ)
Bonanza Gold Company is a mining exploration company based in Nevada that owns the options to explore multiple mining sites in the attempt to eventually establish a new mine or reestablish a historic mine. See the below analysis for recent events that lead me to believe that this company is worth investing in as a junior mine.
Why should you invest in Bonanza Gold (BONZ)?
Bonanza Gold Company recently expanded their largest mine (Cupid Gold Project) from 217 acres to 1,064 acres. This Project has shown to contain 3.8 to 7.7 g/ton which the World Gold Council considers neither a high quality mine or a low quality mine. That being said, the fact that this is an open mine and not an underground mine greatly decreases the overhead involved in searching for gold. This mine would be an attractive project for larger gold mines to explore and develop in a joint venture with Bonanza Goldfields.
Bonanza is also exploring other gold and silver properties located in Goldfield, Tonopah and Comstock Mining Districts of Nevada, the Chloride Mining District of Arizona and the Cripple Creek Mining District of Colorado, all of which are districts that have seen very successful mines in the past. These mining options were mostly obtained in the end of 2019 that saw a merger of 8 different mining companies with Bonanza Goldfields Corp, the surviving company. This boosts Bonanza’s portfolio of mining options to 21 different locations, some historic mines, some fresh mines.
These acquisition moves are thanks to new management that was appointed in 2017. This indicates that the tone at the top from the management is one that wants to take every step possible to start extracting gold and to capitalize on the increase in gold prices. Per their Q1 2020 financial report, management acknowledged that “as of May 10, 2020, the bid price (of gold) per kitco.com is $1,704.80. Bonanza Goldfields has worked hard over the past two years to maintain and grow its properties so that it will be in a position to move forward in an environment of favorable gold prices.”
Downsides of Bonanza Gold (BONZ)
Obviously, an issue with a mine of this size is the debt that can overtake it before they get fully functional. At the beginning of 2020, Bonanza reduced its debt by 50% ($130,000) by selling one of its previously held locations, Thunder Mountain. They will maintain a 1.25% net smelter royalty on the entire site which will give them some passive income. This liquidation is a very positive sign that the company wants to push its chips onto the Cupid property to allow it to focus on extracting the large amount of gold that it contains.
As is the case with penny stocks and various junior mining companies, there is a risk of a going concern. If the company cannot begin generating significant revenue, then they will likely have to begin liquidating some of their mining options. That being said, I am eased by the current acquisitions and steps being made by management to take advantage of the rising price in gold and the mines that they currently have access to. I believe that this stock has the opportunity to parabolic if (and hopefully when) they start digging for gold.
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