How I Underwrote an $18M Gold Mining Raise Projecting a 15x Return

I underwrote an $18M gold mining raise in the US.

The math implies a 15x return...

- Arizona gold mine closed in 1935
- 44,000 tons total historic production
- Montana mine (unmeasured resource)
- Target: $270M return in 6 years (15x from $18M)

The plan is to reopen an old gold mine in Arizona before developing a new site in Montana.

To fund deals like this, I ask 4 questions:

1) What stage of risk are we in?

- No independent NI 43-101 technical report
- The numbers are indicated/inferred by definition
- The AAP relies on a small 80-ton pilot test
- SRM is described as 'unmeasured'

This is early-stage exploration data dressed up as production-ready language. In my experience, it's difficult to finance mines at the exploration stage.

2) What makes the location work?

- Real mining district with historic production
- There is existing infrastructure available

3) How is the downside protected?

Honestly, there's not much described here beyond the ore, and there's no independent valuation on the deposits. I'd need to partner with a geologist for this.

4) Can we control the exit?

- Repayment depends on future production

My verdict:

Weak fit for Private Credit
Weak fit for Family Offices
Weak fit for Institutions

If you allocate to real assets, let's connect 👋