Stock Reversal Incoming: Brascan Gold (BRAS.CN)


Written By: Marc Challande


Published : March  29h, 2022

If you invested in Brascan Gold (BRAS.CN) at the beginning of the year, you would probably be bitter as the stock lost 67% of its value. The stock is more than bearish in the short term. Besides, gold is the safest value globally and is up by 11% year-over-year. Moreover, countless catalysts are coming for the company. We shouldn’t see this stock price for long, granting investors the opportunity to buy the dip.

gold stock companies

Many Big Projects for BRAS

The company is involved throughout North and South America. In the Alegre Gold Project (Para State Brazil), BRAS is engaged in no less than the second most active mining state in Brazil with excellent infrastructure. 

The company intends to explore the opportunities and rapidly develop in Brazil. The geopolitical project has many advantages. Between the high unemployment and a devalued currency for Brazil and the low take rates in Para State, these situations will enable Brascan to explore and discover gold at lower costs. The company has a solid technical team, which means it will get many opportunities, and its team will know how to handle them.

Most of its exciting projects are in Newfoundland. The province is experiencing a new gold rush, with over 30 companies exploring for gold on the island. The region was severely under-explored  while little did they know, Baie Verte, Newfoundland is a mineral-rich region with excellent infrastructure. Its Black Cat property is surrounded by mine operators, developers and explorers such as Shoreline Aggregates, Maritime Resources (TSX-V: MAE), Rambler Metals and Mining (AIM: RMM), Anaconda Mining (TSE: ANX) and others. Its other project, located in Newfoundland as well, is located approximately 30 km south of the town of Baie Verte, Newfoundland. The Property comprises three contiguous mineral claims covering 650 hectares and is easily accessible by a forest road.

 “Brascan is excited to option the Birchy Lake, Miguel’s Lake and Mountain Pond gold properties. This substantially increases our portfolio of gold properties in Newfoundland along with the Black Cat and Middle Arm Fault gold properties. Brascan is funded to carry out exploration programs shortly on all these properties and Alegre Gold Property in Para State, Brazil”.

Balbir Johal, CEO and Director

The company announced it would expand its operations in North and Central Newfoundland by acquiring three projects (March 3rd, 2022). Brascan acquired up to a 100% interest in the Mountain Pond property, the Birchy Lake property, and the Miguel’s Lake property. Brascan will be making aggregate cash payments of $168,000 and  will be issuing an aggregate of 670,000 of its common shares. The firm will also incur exploration expenditures of $725,000 on the property before the fourth anniversary of the date of the agreements. The optionners will retain a 2.5% net smelter royalty (NSR) over the relevant property.

brascan gold

Share Structure/Fundamentals

Its share price is close to its all-time low (current: $0.185 vs. $0.165), with a market cap of $4.9M. If we focus on the whole company’s project, this valuation is minimal. The share price should be closer to its latest financing: $0.30 for 1,903,499 units for gross proceeds of $571,050.00 (February 11th). The share price for the private placement should have constituted strong support, as the company hasn’t generated revenues yet.

The stock is still clearly on a downtrend movement, with its Simple MA (20) at $0.28 and its Simple MA (100) at $0.48. The stock price rebounded from its all-time low, meaning we could see more accumulation at these prices. The question is, “will we assist in a rebound?”, well, it seems like it. The volume average keeps augmenting (16k for 50 days ADV vs. 50k for ten days ADV).

Brascan is on its way to being traded worldwide. As Brascan’s common shares have commenced trading on the Frankfurt Exchange (since the end of January), more important news will help the stock price pick up more steam. Perhaps we could see the company start to be traded on the American side soon.

The stock has great fundamentals. With 21.5M outstanding shares for 34.7 fully diluted shares (156M options + 11.5M warrants), you wouldn’t see this type of data anywhere. Its warrants grant the company to raise $2M cash for $4M fully diluted cash (the company currently has $2M treasury cash on hand). More data you should consider is its insider ownership. With 30% controlled by the company, this number is higher than several companies.

Bottom Line

The company is severely undervalued. With more and more interest in gold, acquisitions done by the company, and its share price should be way higher. As an example, Quant Report gives BRAS a fair valuation of $0.35, leading to a 94% upside. Many catalysts will come soon, taking the stock price higher. This is why BRAS could witness a reversal.

This article solely expresses the opinion of the writer which might be disagreeing with the other writers of Money,eh?. Moreover, the writer isn’t involved in BRAS, and doesn’t own shares of the Company .

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