Informative And Timely Interview With The CEO Of Terraco Gold- Todd Hilditch

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The following interview of Terraco Gold's CEO Todd Hilditch was conduct on January 8-9. 

Please describe Terraco Gold to investors who don't know your story.

- Terraco Gold (TCEGF) is a gold focused company with assets in the western U.S. that gives investors and shareholders exposure to gold equity ownership through gold royalties and gold in the ground.

Please describe Terraco's capital structure, including cash and debt.

Terraco has 134 million shares issued and outstanding and 146 million shares fully diluted. The company has no traditional debt but does have an option to consolidate a royalty position of up to 3% on Barrick Gold's (ABX) Spring Valley project for approximately USD$16 million which equates to buying gold at $184/ounce. The options expire at the end of 2016. The company has current assets of approximately $500k including cash. The issued and outstanding shares have not changed, as a result of financing, in 5 years based on creative cash infusions with royalty transactions.

Who are Terraco's largest shareholders? How much equity is owned by the management team and Board?

- Terraco is largely held by retail shareholders, which has been one of its strengths in a very tough junior market. Insiders own 9% collectively with the CEO, Todd Hilditch owning near 5% of the 9%.

Has there been any insider buying lately?

- From January 1, 2014, until January 6th, 2015, Terraco insiders bought 1,020,000 shares including the CEO buying 775,000 shares. Non-Insiders and strong shareholders continue to add to their positions.

What is Terraco's quarterly cash burn rate?

- The current quarterly burn rate is approximately $100,000.

Terraco's most valuable asset is its (up to) 3% Net Smelter Royalty "NSR" option on the Barrick/Midway Gold (MDW) Spring Valley project in Nevada. Please describe that particular asset.

- Terraco negotiated the purchase (from royalty owners) and financing (from large private equity firms) of over $30 million in gold royalty assets on Barrick Gold's Spring Valley project, where Barrick has now spent over $70m to take the project to pre-feasibility. As part of the multiple transactions Terraco negotiated, it also financed itself without issuing a single share of dilution to shareholders of over $6m in order to advance its Idaho Project and general working capital.

- The resulting asset to Terraco is direct royalty ownership and royalty options to acquire up to 50% of the acquired Spring Valley NSR royalty (up 6%) for a net benefit to Terraco of up to 3% NSR. Terraco's option exercise price (free debt in other words) is roughly $16m which equates to less than $184/ounce gold as a price to Terraco. The best way to see how the NSR royalty covers Spring Valley is to go to Terraco's website and view the Spring Valley presentation on the home page.

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Disclosure: I have no relationship with any company mentioned in this article. I own shares of Terraco Gold and Pershing Gold. 

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Peter Epstein 4 years ago Author's comment

Thanks Adem. I enjoyed doing this interview. I think the company has huge leverage to the price of gold. This is a company that's not going anywhere in the on going gold market shakeout.

Adem Tumerkan 4 years ago Contributor's comment

Ironically I was a shareholder is both and made handsome profits since entry during summer 2013. I am very much looking to get back involved at current prices.

Adem Tumerkan 4 years ago Contributor's comment

This is an excellent article for investors interested in the industry to find out some solid names and information from them.