Quimbaya Gold Inc

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Quimbaya Gold – Company Description Update

Market Cap: ~US$20.2 M
Fully diluted shares: ~31,981,868 (1,367,510 warrants @C$0.75, 50,000 options @C$0.35)

1. Projects and Land Management

Project Location Claim Area Ownership Notes
Tahami Segovia gold belt, Antioquia 17,087 ha 100% / JV Denarius Metals 50/50 artisanal development Flagship, high potential
Berrio Puerto Berrío, Antioquia 8,746 ha 100% -
Maitamac Abejorral/Sonsón, Antioquia 33,223 ha 100% New metallogenic area
Total: ~59,057 ha

· Projects are not contiguous but cover significant gold belts.

· All projects are owned through Remandes acquisitions, Tahami is a joint venture with Denarius.

2. Exploration and Development Activities

  • Drilling: 5-year contract for 100,000 m with Independence Drilling, campaigns start Q3 2024; a 4,000 m campaign planned for Tahami South area in Q2/Q3 2025.
  • Best Grades: Tahami North samples up to 5.86 g/t Au and 133 g/t Ag.
  • Resource Estimates: No published NI 43-101/JORC reports.
  • Mine Type: Likely underground mine, establishment costs +€100 M. Discounted total costs could be ~€220 M.
  • Comparison:
    | Criterion | Aris Mining (Segovia) | Antioquia Gold (Cisneros) | Quimbaya Gold |
    |----------|----------------------|---------------------------|---------------|
    | Mine Type | Underground Mines | Underground Mines | Exploration Stage |
    | Claim Area | ~5,336 ha | ~17,100 ha | ~59,057 ha |
    | Annual Production | ~188 koz (2024) | ~30–45 koz | No Production |
    | Concession | In Production | In Production | Exploratory |
    | AISC | 1,520 /oz | 2,350 /oz | – |

3. Financing and Financial Status

Cash / Cash Equivalents: No exact amount disclosed.

Debt: ~40,310 USD (2023), Cash-to-Debt ~0.08.

Financing: Private placement 2024–2025 approximately 2.79 M CAD.

Operating cash flow: Negative ~1.27 M USD/year.

R&D Expenses: Significant portion of expenditure.

Management Ownership: CEO ~30%, high motivation.

4. Strategy and Future

Drilling begins Q3 2024, Tahami South campaign Q2/Q3 2025.

Projects are located near infrastructure (e.g., Maitamac 80 km from Medellín).

Denarius Metals JV a potential partner for initiating mining operations.

Break-even price and production targets will be clarified after drilling.

5. Risks

Permit and land rights risks: JV Denarius supports processes, official permits not yet obtained.

Dependence on gold price: Profitability clearly dependent on gold price.

Dilution risk: Warrants and options outstanding. Dilution will occur, but at what market cap is significant.

Competition and environmental risks: Artisanal mining in the areas, cooperation with Denarius can mitigate conflicts.

What do others think about junior mines?

1 Like
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Thanks for the opening.

Risks

  1. Exploration and mine development are hellishly expensive. Money must be available and financing channels must be open, otherwise, a grim reaper will come in the form of irrational dilution / warrants.
  2. The company is a junior mining developer under 50m, meaning it’s a very high-risk company. My experience with these is that 8/10 fail at what they try to do. Most investors would be better off buying a large mining company. E.g., B2GOLD. Large companies are already cash-flowing, and financing risks are not as significant because development can be funded from their own cash flows.
  3. Colombia is in the lowest quartile when looking at the country’s attractiveness as a mining investment. Finland, Brazil, Argentina, Congo, Cote d’Ivoire, ETC… all the aforementioned and many other countries are ahead of Colombia.
  4. The company has very poor listings from a Finnish investor’s perspective. You need to have an account somewhere other than Nordnet if you intend to buy. You’ll probably have to use a broker, and that costs money.
  5. A junior mining developer should not have a penny of debt. There is no cash flow; they live entirely on financing rounds.

Pros

  1. Great presentation on the pages and great websites in general.
  2. Colombia certainly still has very potential mineral licenses. But on the other hand, the risks are internal guerrillas and political risks (drug rings, etc.). Several larger companies are also exploring in the country, which is positive.
  3. Soil samples show over 100ppb gold, which is a positive indicator.
  4. Stream and hard rock gold have been mined in the area previously. This indicates that there is material there. A larger ore body needs to be found, and that’s the key.

Sum of the Parts
With this information, the company appears to be exactly the type of company with a maximum value of 15 million USD. No resources or existing production facilities to which salvage value could be assigned. Their probability of success is probably 2 / 1000. First, something interesting needs to be found with diamond drilling, and then a larger resource can begin to be verified, etc. I don’t place much value on small cash flows from a small stream gold project, because it is a mineral exploration company, and ultimately value is created by drilling and producing a viable mineral deposit.
Honestly, I don’t see anything special about this company; there are probably 70 similar companies listed in Canada trying to do something similar somewhere in the world, and things are still very much in their infancy. If for some strange reason you specifically want to invest in Colombia and in companies that are specifically looking for ore there, then this might work. But still, the probability of success is 2 / 1000.

2 Likes
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Yeah, it’s a risky company. My own allocation to these in the portfolio is 0.5-3%; of course, if one takes off, I’ll temporarily tolerate larger allocations. I want to see results as the drillings progress, so I can see how to develop the allocation.

I’ve started investing in juniors partly because Finland has started to feel so boring, and both realized returns and return expectations have dropped significantly.

My own reason why I don’t want to invest in those bigger mining giants is that I want to be able to make a decision at the individual mine level whether I stay or not. The big ones can invest completely haphazardly. Sometimes it feels like they play double or nothing for too long until they get nothing. So I want to benefit greatly from successes. (Well, okay, I’ve had some Glencore on/off in my portfolio, mostly for the fun of playing).

Then, specifically Quimbaya. I believe that in these, one can get hold of asymmetric information by getting to know people. I don’t consider debt bad at this stage. It can be paid off at a higher level with a share issue. High concentrations made me interested in the company. I believe that if high concentrations are confirmed as drilling progresses, the stock will react nicely upwards; if it’s lukewarm, I can exit at almost the same prices.

Time will tell what happens to this company.

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Is John Kaiser a familiar name? If you’re fond of juniors, you might enjoy his writings. Over two decades ago I developed the rational speculation model as a tool to apply quantitative thinking to a sector which has no intrinsic value, just the potential to create intrinsic value in the form of a future mine that feeds the physical world. … Most projects explored by juniors fail to become orebodies worth developing as mines, but until that failure has become painfully obvious, there remains potential for success. This potential outcome has speculative value, which is defined as the chance of the outcome becoming reality multiplied by the value of the expected outcome."

Source: https://open.substack.com/pub/kaiserresearch/p/attracting-new-and-lost-eyeballs?utm_campaign=post&utm_medium=web
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I must also share this recent Kaiser interview on the MiningStockEducation.com channel: https://youtu.be/pGNgOW5k_54?si=Fxc17ZN7tsntZuJB e.g. at 2:28: If you’re able to discard all the fake and lifestyle juniors that pollute the at least the Canadian system, of which probably 50% need to just not exist. But that would still leave about 600 companies to pick and choose from …

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Finland is certainly not a mining investment paradise. Options are very limited, and quality is even harder to find. Endomines’ valuation is already incredibly high; I don’t understand why anyone would ever buy it at current prices. Canada has a ton of good and affordable investments, if you just bother to dig and do the work.

Yes, among mid-tier producers and development companies, there’s such potential that if metal prices rise or the sector otherwise takes off, they can multiply. Very large companies, of course, don’t fall into this category, e.g., Barrick or Agnico. I’d rather take a fairly probable 200% over 5 years than invest purely on the hope that drills hit ore. Nowadays, I usually wait for the drilling results first and then re-evaluate how good or bad those results were and what they show. I’d rather pay double the price then if something truly amazing is actually found. The probability of finding such a reasonable mineral deposit was something like 1/3000.

Yes, Kaiser is very familiar. I have indeed been investing in mining for probably 15 years myself. Made a lot of money with them and also lost everything in certain stocks.

B2gold offers an easy 100-200% /24 months if their newest mega project, Back River, starts up as expected in Canada. Sometimes between 2015-17, many companies were still incredibly cheap… You could buy world-class deposits on the stock market for 100 million. Nowadays, you have to pay a higher price because geopolitics are messed up, and everyone wants metals from friends and as close as possible. Country risks are also much higher right now. I’ve already experienced the rise of Uranium, the rise of gold, and the rise of many other metals a couple of times. When mining companies perform and the stock market is interested in them, money can pour in from all directions. But I focus on quality companies and want my projects to work even during bad times.

I’d rather take a worse project with top-tier management than the other way around. A world-class deposit and terrible management. Always and every day. A good example is the Lundin family. Money practically follows them, and almost everything they do is top-notch. Projects work, and the approach is long-term.

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Yes, good leadership is a very important thing. However, this is a big contradiction if competent people (i.e., people who have demonstrably succeeded). There are also those who may not be able to work such long hours because they don’t necessarily need to. Or they are addicts, whether the addiction is work or something else. This increases the “risk of good successes” and the risk of a god complex is high. Well, this is a normal problem in investing.

I trust many people’s good execution ability, but I consider myself a good allocator. Therefore, I like it when management focuses on project implementation and doesn’t change focus too much. That’s why I like juniors.

P.S. I will probably open up other junior investments here once I get around to writing them up. My own free flow of thoughts written down is only clear to me, and not even always to me. :sweat_smile:

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Interesting information from the surface about porphyry, and about starting to follow it, as well as a purchase of 190%.