Gold Co. With Expanding Production Has 'Bright' Future

While Soma Gold Corp.'s (TSXV:SOMA;OTC:SMAGF;WKN:A2P4DU) stock took a hit after its CEO stepped down temporarily, with expanding production numbers and gold set to rise this year, the company's future "could scarcely be brighter," Technical Analyst Clive Maund noted in a January report.

The stock closed at CA$0.60 on January 12 but dropped to CA$0.55 on its highest trading volume since 2023 on the day of the announcement, January 16, and CA$0.49 at the end of that week.

"Whilst the fact that management currently owns about two-thirds of the stock rules out a hostile takeover, their big investment in the company is certainly a vote of confidence," Maund commented. "In addition, the company's large land holdings in a gold-rich district hold out the strong possibility of additional discoveries of high-grade ore."

Javier Cordova Unda temporarily stepped down as chief executive officer of the company, which owns two mines in Colombia, to "attend to personal matters" and has taken a leave of absence from the presidency.

The current price "is viewed as presenting an excellent opportunity to buy the stock at a good price," Technical Analyst Clive Maund wrote.

Geoffrey Hampson, the current executive chairman of the company's board, is acting as interim CEO.

"I've got several of the of our current shareholders who have called me and said, 'Is this a good buying opportunity?' And I've said yes," Hampson told Streetwise Reports.

Maund agreed, noting that "the technical outlook of the stock is excellent" and Soma's large land holdings in a gold-rich district "hold out the strong possibility of additional discoveries of high-grade ore."

The current price "is viewed as presenting an excellent opportunity to buy the stock at a good price," he wrote.

The Catalyst: Doubling Gold Production

Soma's mines in Antioquia, Colombia, have a combined milling capacity of 675 tonnes per day. Its El Bagre mining complex produced 23,800 ounces of gold in 2022, and 32,340 ounces of gold in 2023, and its Limon Mill is available to restart production when production from its Cordero Mine (part of the El Bagre mining complex) reaches capacity.

Soma Gold's other project, Nechí, consists of the El Catorce, Santa Elena, and Santa Maria deposits.

The company said it plans to increase gold production to 38,000 to 40,000 ounces gold this year and to 85,000 to 100,000 ounces by 2027-2028, according to its investor presentation, generating over CA$100 million of EBITDA and CA$50 million net profit in 2027-2028.

"We re-looked at the Cordero mine plan and determined that there was a better way to do certain parts of the mine," Hampson said. "So, we've adjusted the mine plan."

Soma plans to up its rate of production from 450 tonnes per day (tpd) to 640 tpd by the second quarter.

Its current total resources are 526,000 ounces, including 404,000 NI 43-101 complaint ounces. An updated NI 43-101 resource estimate is due in early 2025.

Excellent Neighbors

Soma's properties are also in a great neighborhood with AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) and B2Gold Corp.'s (BTG:NYSE; BTO:TSX; B2G:NSX) 6-million-ounce (Moz) Garmalote project and Aris Gold Corp.'s (ARIS:TSX; ALLXF:OTCQX) 5.5 Moz Segovia project nearby. The Antioquia jurisdiction hosts more than 100 Moz of total discoveries, and informal mining in the Otú fault has mined an estimated 17 Moz of gold, the company said.

As a narrow-vein system, Soma has been required to do a larger amount of drilling to get the big picture of the ore body, leaving it to do a "kind of mining by feel," Hampson said. But he said the company is still finding "more gold than we're mining on an annual basis."

"Some investors look at our resource and say, 'Well, you've only got four or five years' worth of mining life there,'" Hampson said. "And I go, 'Yeah, but that doesn't take into account what we find every year.'"

Hampson said the company is still finding new veins and extensions that will extend the resource.

One way Soma could increase its resources and production even more (to as much as 150,000 ounces per year) would be through acquiring other projects, Hampson said.

"I think that the way to really create the value for the shareholders is to be to be growing, to have a plan to expand the number of ounces and to try and get some momentum in the marketplace," he said.

However, the company would prefer to look at properties that are advanced in their development.

"It needs to be shovel-ready," he said.

Gold 'Ready to Rally Soon'

As the gold market continues to sit above US$2,000 an ounce, some analysts see a lucrative future for the yellow metal, despite signals from the Fed that it is in no hurry to lower interest rates.

However, Barry Dawes of Martin Place Securities wrote that gold looked "ready to break higher against bonds," and that "gold stock sentiment is close to a bottom" and "should be ready to rally soon now."

"Gold stock investors and speculators have been ground into a pulp over the past few years, but there is still hope for a better future," Dawes wrote on February 24. "Many technical (indicators) are suggesting a breakout is at hand."

Rick Mills, author of the Ahead of the Herd newsletter, noted that the biggest beneficiaries of rising gold prices would be gold miners' stocks, "which are dirt-cheap and mostly forgotten today."

"That leading GDX gold-stock ETF can more than double during major gold uplegs!" he wrote. "And smaller fundamentally superior mid-tiers and juniors well outperform GDX majors."

Ownership and Share Structure

Headquartered in Vancouver, Soma Gold Corp. has a market cap of US$40.19 million and trades in a 52-week range of CA$0.30 and CA$0.74. 

According to Reuters, 19.27% of the company is held by management and insiders. CEO and Chairman Geoffery Hampson has 18.27% and 0.56% through his wholly owned company Lake Forest Development Corp., Vice President Jean-Francois Meilleur has 0.52%, Director Glenn Walsh has 0.31% directly and 44.07% through his wholly owned company, Conex Services Inc., and CFO Greg

Hayes has 0.12%.

2.26% is with strategic investors.

0.70% is with institutions. Palos Management Inc. has 0.27%, and Marmite Capital AG has 0.33%. The rest is with retail investors. 

Important Disclosures:

1. Soma Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. In addition, Soma Gold Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Soma Gold Corp.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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