Goff Corp: Plenty Of Room To Grow For This Gold Mining Stock

B2Gold (BTO.TO), the Canadian headquartered gold miner with properties in Latin America and Africa, was once a junior gold miner trading for less than 30 cents a share in late-2008 in the depths of the Great Recession. The market cap of this tiny gold stock was less than $50 million, with its 145.6 million shares outstanding at the end of 2008. Now it has grown into almost a $2 billion mid-size gold mining company trading one of the world’s most well-known exchanges, the Toronto Stock Exchange.

That rise in company valuation may foreshadow what’s to come for Goff Corp (GOFF), the emerging gold miner with a project in Colombia. Goff Corp, with a market cap of about $130 million, has a lot of room to go before reaching B2Gold’s current company valuation, but the company is already beating B2Gold in one aspect: its beginning company valuation is more than twice as high as what B2Gold started at. That implies that Goff’s assets have more growth potential as the company is still just in the Phase 1 drilling phase.

Goff Corp has more in common with B2Gold than just gold mining and being a junior gold miner. Some of B2Gold’s most impressive projects are located in Colombia, which is where Goff Corp’s La Frontera Gold Project is. The Colombian gold industry has been impressive, generating nearly $5 billion of gold production in 2012 which bodes well for Goff Corp and B2Gold, with their exposure to Colombian gold.

Continental Gold (CNL.TO) is another gold miner with a significant presence in Colombia. Continental Gold primarily engages in the acquisition, exploration, evaluation, and development of gold resource properties. It principally owns a 100% stake in the Buriticá Project, a gold, silver, and zinc resource project located in north-western Colombia. As of March 6, 2013, the company’s Buritica Project comprised 54 tenements and applications covering approximately 57,588 hectares. It also holds the rights to explore and develop 6 properties in Colombia, totaling approximately 160,860 hectares, including 46 registered concession contracts totaling 59,563 hectares; 50 applications with technical study totaling 62,754 hectares; and 17 pending concession applications totaling 38,543 hectares.

The company had similar humble beginnings to B2Gold, with shares beginning to trade in the $2.50 range initially with 44 million shares outstanding for a market cap of $110 million. Just as with B2Gold though, Continental was able to provide the information necessary to give investors’ confidence in management and the company’s properties by providing solid mining figures and making good on its promises. The market has believed in Continental and now it is sporting a valuation over $600 million, which is more than 5 times higher than what it initially began at. The confidence-building is something Goff Corp is working on but so far, management has shown the market that it will aggressively develop the La Frontera property and the market is rewarding Goff with a premium valuation.

AngloGold Ashanti (AU), a stock struggling with its South African exposure, seems like it has no place on the list but it does share one important trait with B2Gold, Continental Gold and Goff Corp, it is in the same place now where those three were when they first became public companies. With the company based in South Africa and having significant gold exposure in the country, AU has struggled with the economic difficulties in South Africa and now the market is placing significant doubt in the company’s assets and management. The company is now trading at just below $22 a share compared to a price of more than twice that just two years earlier. However, with its world-renown asset base in countries such as the previously mentioned South Africa, Ghana, Guinea, Mali, Namibia, and Tanzania, Australia, Argentina, Brazil, and the United States, the company is well-positioned to silence the doubters and get back to what it does best, mine gold and make its shareholders happy. Concurring on that direction are analysts, with their $40 price target on the stock, nearly a double from today’s prices.

Silencing doubters is what Goff Corp has in mind as well and is strongly positioned to do so. Shorts have been attacking Goff Corp with a vengeance and it seems like they could be pushing their luck on this one. With 13 million shares short and total volume of 54 million on April 3, the highest in 5 days, even taking the most optimistic estimate, it would take 4 days to cover all of the shares short. For comparison purposes, highly-shorted gaming stock Zynga (ZNGA), has a days-to-cover figure of just 1. If any news comes for Goff’s upcoming drilling exploration that really begins to demonstrate the legitimacy of the project, the stock may stage a significant rally as shorts will have cover, providing a larger push for the shares.

Goff Corp has plenty of room for upside, especially compared to the closest publically traded comps of the stock. The upside target is hard to guess but a buy is definitely in order. Murphy Analytics of St. Louis, Missouri has suggested an upside target of $4 for the shares. I think that’s a reasonable target, especially with the gold push in Colombia and Goff Corp’s quickly-progressing exploration program.