Midas Gold Corp

Midas Gold Corp (TSX: MAX) is a Canadian company engaged in exploring and acquiring mining properties. Its activities cover locating, acquiring, developing, and restoring mineral properties. The company's core project is the Stibnite gold project located in Valley County, Idaho. The corporation operates through one segment, namely, Mineral exploration in the United States.

Key highlights

• The company announced on 26th Aug 2020 that Paulson & Co. Inc would be exercising the conversion feature on the convertible notes held by Paulson at the aggregate principal amount of CAD 82.1 million for a total of 199.6 million common shares of the company which will result in Paulson holding approximately 44.12% of the company's outstanding Common Shares.

• The mineral resources and mineral reserves at the project are contained within areas that have seen extensive disturbance resulting from prior mining activities. For the company to advance its interests at the Stibnite site, the project will be subject to several Federal, State and local laws and regulations. However, The company mentioned that it is not aware of any environmental, permitting, legal or other reasons that would prevent it from advancing the project

• The company has a limited history as an exploration company and does not have any experience in putting a mining project into production. 

Financial overview of Q3 2020 (expressed in US dollars, except for number of shares)

Source: Company

• In Q3 2020, the company posted an operating loss of USD 7.6 million as compared to a loss of USD 8.2 million in the previous corresponding period.

• The company posted a net loss of USD 171.2 million in Q3 2020 as against USD 5.1 million in Q3 2019, due to change in fair value of the convertible note of USD 153.7 million. 

Risks associated with investment

The company is subject to numerous government regulations, which could cause delays in carrying out its operations, and increase costs related to its business. 

Stock recommendation

The company is an exploration stage company and yet to report revenue. The company mentioned that the comment period on the draft EIS for the Stibnite Gold project is complete, and regulators will review the comments submitted, evaluate the alternatives contained in the DEIS in light of the comments, consider any refinements that can be made to the Stibnite Gold Project between now and when the final Environmental Impact Statement ("FEIS") is released, and select a preferred alternative. Currently, the USFS is scheduled to release the FEIS in Q2 of 2021 and to issue its record of decision ("ROD") on the Project in late Q3 of 2021. Any delay in the targeted road map would affect the group’s prospect. At the last closing price, the stock was trading below the short-term support level of 20-day, 50-day and 100-day SMA, which indicates that there is a downward momentum in the stock. Hence, considering the lack of visible growth drivers, we recommend a ‘Watch’ stance on the stock at the closing price of CAD 1.18 on November 23, 2020. 

Daily Technical Chart. Source: Refinitiv (Thomson Reuters)

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