Pacton Gold Inc (TSX.V: PAC.V) (OTCMKTS: PACXF) has been in the news lately, and for all good reasons. In May, the company closed a $5.5 million private placement, added a significant strategic shareholder (Eric Sprott) and acquired several new key licenses. All these are good enough reasons to invest in PAC. Investors clearly are aware and understand the importance of such developments, and hence, have been showing their confidence in the stock.
Investor’s confident in PAC is quite evident from the fact that in the last five trading sessions (last being May 30 th ), the stock has gained over 20%, and year-to-date it is up over 160%. Also, in comparison to Novo Resources, a bigger name in the gold mining industry, PAC stock is well ahead.
Source: Google Finance
Pacton Gold is apparently working on a well-defined plan. First, it has equipped itself with the funds to finance its growth ($5.5 million placement), and then, it went on a buying spree, acquiring key properties in Australia’s Pilbara gold rush. Following the acquisition, PAC is now among the top player in the Pilbara, a region that has the potential to help PAC achieve new growth records.
Even Impact Minerals managing director – Dr Mike Jones, is pretty impressed with PAC. Jones said that he recently had a meeting with PAC’s management and backers, and he was “impressed with their track records, their business plan for conglomerate-gold exploration in the Pilbara and also their ability to raise significant capital. This includes C$2 million from Eric Sprott, a major direct and indirect shareholder in Novo Resources, as part of a C$5.5 million raising.” PAC recently entered into an agreement with Impact to acquire its Pilbara gold project.
Further, the overall outlook of the gold mining industry is also encouraging. This is another big reason to bet on Pacton Gold. Zacks believes that “the valuation picture for the sector is attractive, highlighting a value-oriented path head.” The sector is believed to be undervalued when compared to the broader marker. Gold mining industry has a trailing 12-monthEV/EBITDA multiple of 8.3, compared to 11.3 for the S&P 500’s.
“The industry’s lower-than-market positioning calls for some more upside in the quarters ahead,” says Zacks. Also, Zacks notes that the demand and the supply factors are also favorable.
Another reason to invest in Pacton Gold is an assurance from the WGC (World Gold Council) that gold’s shine is here to stay. With the rise of the new type assets class, such as cryptocurrencies, there were concerns that gold will lose its importance as an alternative asset. However, WGC’s John Reade notes that gold’s importance as an alternative asset and portfolio diversifier won’t be replaced by other assets for atleast next thirty years.
Reade even noted that displacing gold as a world-class asset would disrupt the entire financial marketplace. “The capital market structure as we see it will probably continue,” Reade told Kitco News. “Gold is part of the financial system. It is a mainstream financial asset and it too will continue.”
All these reasons together make a pretty convincing case for investing in Pacton Gold.