Inception Mining Stays Nimble as Gold Works Through Near-Term Volatility
The gold mining industry sector is a topic of speculation with what looks to be the early signs of the next cycle to take the precious yellow metal upward since trending downward from a record high of $1,923 in August 2011. While many analysts focus on major and mid-tier producers, some of the most interesting stories in the space are small producers that weathered the storm and came out the other end stronger for it.
This case is exemplified by Inception Mining (IMII), a diversified miner with producing, development, exploration and resource projects in its portfolio. When the gold market was sinking from its highs and companies were shuttering mines, unhooking drill rigs and in some cases, going out of business, Inception was growing into the agile company it is today. This was accomplished through the acquisition of Utah-based privately held Inception Development Inc. in May 2013 and then privately held Turks and Caicos company Clavo Rico Ltd. in October 2015.
Smart Acquisitions in Down Market
With the acquisition of Inception Development, the company brought the UP & Burlington Gold Mine under its umbrella. A classic case of a northern U.S. mining property, UP & Burlington was discovered in the late 1800s, mined in the early 1900s and went idle around the start of World War II. In many cases, once producing mines became dormant due to laws commanding a united war effort only to never return to their old ways. Moreover, most of these mines were never mined fully to depth or strike, nor were modern technologies used to explore the property or produce minerals, potentially leaving a lot of money in the ground.
A historical resource estimate from 1935 showed 71,179 ounces of gold contained within 122,600 tons of ore grading 18.14 grams per ton gold at UP & Burlington.
Inception manages development of the UP & Burlington project with fiduciary precision, using contract labor to keep capital expenditures at a minimum. The company continues to move towards a goal of commercial production by June 2018 by completing testing and updating feasibility studies, among other things.
Prospering While Others Fold
The small miner (market cap ~$15.5 million) is extremely rare in that it generates revenue through mineral production at its Clavo Rico Project in Honduras, which helps fund its development effort at UP & Burlington and expansion at Clavo Rico. Further, because UP & Burlington is operated through a fully outsourced model, Inception, in the words of CEO Trent D’Ambrosio, “Can turn the switch on and operate, or we could turn the switch off, depending on price and seasonality and other industry influences.”
Embracing the challenging mining environment as he got Inception going, D’Ambrosio told Equities.com in March, “We had to adapt, learn to do things slightly different with a very limited budget and operate very conservatively. We have always been forced to look at doing things and operating differently to make the most of what was at hand.”
That’s a savvy model to conserve capital and protect shareholder value.
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