The gold price is getting hammered today and is currently trading 1.3% lower at $1155/oz. Even though this is a relatively modest drop, some mining companies are falling off a cliff.
Integra Gold (ICG.V), an advanced-stage exploration company operating in Québec is currently trading at just C$0.27 per share after a 10% drop, and we’re really surprised by this development as there’s absolutely no reason for Mr Market to dump Integra Gold. As Integra Gold is operating in Canada and will incur the majority of its expenses in Canadian Dollar, one would need to look at the gold price expressed in Canadian Dollars as well.
Using the current spot price of gold and an USD/CAD exchange rate of 1.275, gold is trading at C$1472 per ounce. That’s important because Integra’s base case scenario of the PEA is using a gold price of C$1340 per ounce, 10% lower than the current spot price! So there’s absolutely no reason for the market to punish Integra Gold today. If the company was worth 35 cents just two weeks ago, why would its value have dropped by 20% despite the fact the current gold price still is comfortably HIGHER than the base case price in the PEA?
We already own a position in Integra Gold but will increase our position today. The weaker Canadian Dollar is very beneficial for the Lamaque project which now has an anticipated AISC of just $575/oz.
Disclosure: The author holds a long position in Integra Gold and will increase this position. Integra Gold is a sponsor of the website. Please see our disclaimer for current positions.