We have been looking at a number of mining stocks currently trading what we consider way below their real value. We eventually go to the 10 most undervalued and whittled it down to one. Tombola Gold Ltd. How do we judge a value of a Mining Company. The first we consider is the areas and or locations of areas of prospectivity, of the mineral tenements that the Company owns. Without doubt, a relatively unknown company namely Tombola Gold ticks this location box with all flags flying. The suite of mining tenements owns and located in one of the largest and best mineral fields in Australia, the Cloncurry Mineral Field. Without doubt the largest and richest field of todays, high value minerals, Gold, Copper and Cobalt The area is also referred to or known as the Mt Isa Inlier which is home to some of the richest Copper, Lead, Zinc , Silver, Gold and Cobalt zone of mineralisation in the Southern Hemisphere. Mt Isa Mines, Glencore owned Ernest Henry Mine, BHP owned Cannigton Silver mine the worlds largest, Century Zinc Mine.

The suite of mining tenements owned by Tombola have been explored over the years when the minerals prices were so low that it did not warrant mining them. Today is a completely different story. We have had a serious look and carried out a fine tuned due diligence investigation on all of the tenements owned by Tombola. The rocks below was part of an announcement put out by Tombola in a Company update on the 29th November 2021. I have never seen a rock covered in Erythrite (Cobalt) before. The Pink on the rock is Cobalt Bloom, indicating that the rock is carrying extremely high grade Cobalt. These rocks, they have phtographed, are actually specimens, worth a lot of money to collectors. How this stock didn’t rocket on the back of the photos is nothing but a mystery. Maybe someone kept the stock from rising on the day and is now loading up. Who knows these days as the market is so manipulated. Where are the Australian, so called, “mining analysts” ? one may ask. I do hope that Tombola don’t wait too long to drill this zone of so obvious high grade Cobalt mineralisation.

  1. The Mt Freda and Golden Mile mining leases over 113,000 ounces of Gold and 1m million lbs of Cobalt with only limited shallow drilling. BHP in 1987 dclared the Mt Freda and surround area the most prospective ground in Queensland.
  2. Mt Freda Gold Mine was mined in 1934 as an underground mine with an average grade of 14g/t Gold and again as an open cut in 1987 to 1990 as an open pit mining operation with an average recovered grade of 4.4g/t Au
  3. Mt Freda was also previously owned by Queensland Mining Corporation and as well as the Gold Resources, was given a JORC compliant resource of 1 million lbs of Cobalt. There is no question the quite large holding of close knit package of tenements all abutting and owned by Tombola has been carefully packaged together covering what is unquestionably some of the best and highly mineralised ground in Queensland. Someone in the Company has accumulated all of the tightly held ground with an end purpose and seem quite happy for the share price to languish.
  4. The Company has reported that Gold Production to commence first quarter 2022.
  5. Financial Study Nett profit of over $90m of over first 2 years
  6. Looking from a valuation perspective, the Nett Profit is nearly 4 times the current total Market Capitalisation of Tombola.. Diversified Mineral Resources the Company that mined Mt Freda, had a market Cap of $270m when the Gold price was $A380 per ounce. Today with the Gold price at $A2400 an ounce the market cap for Tombola that owns the exact same M Freda has a market cap of $23m. The undervaluation of this Company, we dont think has gone unnoticed by some and there has been some heavy industry players accumlating and not appearing in any hurry to push the stock northwards.
  7. The EPM No 15923 which is owned by Tombola has had geological exploration and soil sampling by BHP and others around 30 years ago and has since remained un explored. The results from these stream sediment sampling is indicating one of the highest grades and concentrations of Cobalt in the Cloncurry Mineral Field.
  8. The EPM No 27763 contains multiple historical workings including high grade Cobalt mines that were worked until the turn of the 19th Century. A recent announcement put out by Tombola illustrated Cobalt bloom (Erythrite) oozing form the rocks surrounding some of the historical Cobalt mines.
  9. Our investigation also looked at some of the historical data on other Mining Leases and tenements held by Tombola. They included the Canteen Mining Lease that was mined by Diversified Mineral Resources and others and processed through Mt Isa Mines at an average grade of 6% Copper with Gold credits. Adjoining the Canteen Mining lease that has been drilled and returned high grade Copper/Gold over a 400m long strike length is the historical Evening Star Copper/Gold Mine also owned by Tombola. It was also mined by a number of mines since the late 1800’s right up until 1989 and also processed by Mt Isa Mine with an average grade of 6% Copper and 4 g/t Gold. Why the broking community analysts have not picked up on this Company is astounding.

So why is this Company so undervalued? Seems after a three month investigation, we have come to the conclusion that the market has never really taken a good look at this Company or its assets. It seems that when the Company was formed by way of a back door listing of an ASX penny dreadful Eumeralla Resources, that the directors handed out the stock like candy. At the time of the back door listing Eumerella was trading a $0.001c, So it meant that all of the previous shareholders were making money at anything above a tenth of a cent. So the selling started. The Company has never been allowed to breathe. It is constantly under selling pressure, without any real thought it seems by the sellers. Shareholders it seems, are selling because other shareholders are selling. However, without question, and at the other end of the spectrum someone is quietly accumulating and squirreling the stock away.

There is no question in our minds that there is a game at play. We think that once this Company pours its first Gold bar a pandora’s box of jewels will become evident. One major player in the stock was interviewed, seemed somewhat shy, when asked “why is the stock being sold at these prices, considering the highly valuable mineral tenements that the Company holds?, the response was, ” like sheep, the current decisions are not based on logic, just follow the herd mentality, in 6 months time, lets what the the sheep think of their decision to sell, fools and money don’t stay friends for long!”, he said.

In our opinion: Tombola, way back in 1989, owned by Diversified Mineral Resources owned (Mt Freda Gold Mine) now just one of the multiple tenements owned by Tombola, in 1988 had a market capitalisation of $A270m (when Gold price of $A380 ounce). The question begs, how could in 2021 could the same mining tenement in Tombola, have a market capitalisation of only $A23m. To make things more bizarre, the Gold price is now ten times the price of what is was 1989? This is mystifying. Someone has to be laughing behind the scenes. Maybe privatisation?? Market Cap $23m, nett profit of $90m in two years, the best suite of mineral assets in the Mt Isa Inlier. Go figure that one. Has to be the most undervalued ASX listed in our opinion.

Kitcogold has turned over every stone and investigated all of current and historical data available to solve this dilemma of undervaluation , but at the end of the day Tombola wins first price of the most undervalued stock on the ASX, hands down. There is no one even a close second place on the podium.

The writer of this article (Goldman) has purchased shares in Tombola. However the article above is factual and readers can make up their own minds as to the sincerity and truth of the comments above.


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