Argo Gold Update – September 2022 – the Oil and Gas Opportunity
After a 7-year slowdown in the oil & gas markets punctuated by the unprecedented global pandemic, the Canadian oil & gas industry is poised for a strong decade. Publicly traded oil & gas equities continue to sell at shockingly low valuations relative to the multiples of the broader market. A fundamental and value investors dream.
It goes without saying that non-core assets are transacting at similar low multiples. Also, as there is no value attributed to reserves or exploration upside and thus there is a bounty of high-quality oil & gas exploration and development to production opportunities.
Since February 2022, Argo has been continually reviewing and bidding on Oil & Gas opportunities. In June 2022, Argo Gold entered into 2 LOI’s on 2 prospects in southern Alberta to earn 100% of the mineral rights subject to a GOR (Gross Overriding Royalty) in exchange for drilling one vertical exploration hole on each prospect. The oil prospects are seismically defined and are located within in a well-known producing trend with proven oil zones and surrounding infrastructure. Four additional well locations have been identified on the two prospects. Estimated yield on the two initial exploration wells is estimated to be 100 bbl/day to 150 bbl/day in range and the estimated ultimate recovery (EUR) of the two initial wells is expected to be 275,000 bbl oil and 300,000 bbl oil respectively. Conservatively, the cost per well into production is C$0.7M per well and estimated annual revenue is C$5M per well with an operating life of 6 years per well. The math is compelling. Canada has the highest environmental standards for oil & gas exploration and production so it is the best place to increase production to mitigate crippling prices and supply concerns.
Argo has also continued to increase its corporate capacity with Gary Lobb – an experienced oil and gas executive joining the company as Vice-President of Finance and CFO; and a Strategic Alliance with Jasper Mining – a company with a very experienced oil and gas executive team that is also focused on expanding into the oil and gas sector.
Argo Gold is not abandoning its gold assets. Argo Gold’s is the 100% owner of three gold projects in northwestern Ontario; the Uchi Gold Project, the Angela Lake Gold Project and the Talbot Lake Gold Project. The company has continued to advance the high-grade Uchi Gold Project. Preliminary work has been completed at the Angela Lake Gold Project. Argo Gold is in the permitting process for the Talbot Lake Gold Project.
Argo Gold is also the 100% owner of the Hurdman Silver-Zinc Project, Four blocks covering 50 square kilometres of copper-nickel exploration claims surrounding Copper Lake’s Marshall Lake Copper Project, and the Keelow Lake Cobalt Project. The plan is to spin-out these assets into a CPC as “Argo Silver” whereby Argo Gold shareholders will receive shares of Argo Silver; but poor equity markets this summer have put the initiative on hold.
Argo Gold currently has 66 M shares outstanding. About 40% of the shares are held by institutions. The current $5 million market capitalization is an intriguing opportunity.
CSE: ARQ, OTCQB: ARBTF and XFRA, XSTU, XBER: A2ASDS
Why Invest in Argo Gold
Argo Gold is advancing its 100% owned Uchi Lake Gold Project in the Red Lake District
2019 drill results include 132 g/t Au over 1.8 metres at the flagship Uchi Gold Project
As a result of the last financing, Eric Sprott is now the largest shareholder of Argo Gold with a 18% interest
Argo Gold (CSE: ARQ) has 63.1 M shares outstanding and a market capitalization of C$12 million