One Of The Largest Undeveloped Gold Projects In Quebec

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1 One Of The Largest Undeveloped Gold Projects In Quebec Apr. 11, :44 PM ET About: Aurvista Gold Corp (ARVSF) Don Durrett Growth, contrarian, newsletter provider, research analyst Summary A step by step look at Aurvista Gold. Extremely undervalued with a large resource in a great location. A high risk development stock with an excellent project. Long-term investment, but very high potential return. Management issues are the biggest risk. The Junior mining sector is appealing from a risk/reward viewpoint. Whereas the risk is substantial for Junior gold and silver mining stocks, the upside is also substantial. My current focus is on finding companies with solid projects that are advancing toward production. I want development companies and not exploration companies, because these are companies that will be rewarded with large cash flow at higher gold prices. I consider all Junior development companies as high risk speculation stocks, because you can never know if they will make it into production. If they have trouble with financing or if the geology is analyzed incorrectly (e.g. Rubicon Minerals), these stocks can drop like a rock. Also, management is crucial and can disappoint investors with poor decisions. If we are heading into another gold run that could see new highs above the 2011 level of $1935, then it would be wise to spot the potential winners in advance. The biggest winners are likely to be those that are currently valued under $100 million, and are sitting on development projects that have all of the factors needed to be successful. I will go over these factors below for one such Junior. My investing style is to focus on potential future cash flow in conjunction with higher gold prices. For instance, what is the future value of MyFavoriteGoldStock if they develop a 5 million oz project and

2 produce 300,000 oz annually at $2,000 gold? If you just do a quick and dirty analysis using potential future cash flow, you get 300,000 oz x $500 (estimated cash flow per oz) = $150 million in annual cash flow. If you multiply that by 10 you get a $1.5 billion valuation. Note that some companies were valued at 30x cash flow during the last mania in stocks in 1980, and a 10x cash flow valuation is quite common today for strong mining companies. It's amazing how valuable a mining company could become that owns large profitable projects. There are many development stocks today with solid projects. Not all of them will be successful in building their mines, so it is a crapshoot picking the winners early. The smart play is to watch these stocks and see who is going to get financing. Of course, the longer you wait the higher will be your entry price. The only way you can understand the risk of a highly undervalued stock is to do your own due diligence. Below I will go step-by-step and show you what to look for when analyzing a mining stock. But even with this data in hand, you should do your own due diligence to confirm what I have written. Even if you think you know a stock intimately, the data will change. If there is one constant in the story of a stock, it is change. And the higher the risk, it seems like the data changes more frequently. Whereas a Major or a strong mid-tier producer can weather a data change, a Junior can drop in value a significant percentage on small changes. The volatility can be staggering, and sometimes Juniors do not survive these changes. The following analysis is based on data from the database. Stock Name Aurvista Gold Aurvista Gold Symbol (US) Type Risk Share Price (US) FD Mkt FD Cap Shares (4/11/2016) OTCPK:ARVSF Gold High M $3M Aurvista Gold (OTCPK:ARVSF) has 3 million oz (.75 gpt) of gold (mostly inferred) in Quebec, but investors don't care. They are valued at $2 per oz for future reserves, which is about as cheap as you will find for a large deposit in Canada. They have a $3 million FD market cap. This could be a 100 bagger if they get financing and build the mine. Money is currently hard to come by, but I think they can raise money once gold prices rise. They released a PEA with a high grade starter pit with a small capex. Production would be around 40,000 oz per year. The after-tax IRR is 35% at $1300 gold. They also have an underground option with a $55 million capex. It is also for low production. They want to start small and grow organically, which is a good strategy. I like the location and exploration potential at the Douay property. They have many targets to increase the size of the resource from 3 million oz to 4 million oz or more. How much would a 4 million oz deposit in Quebec be worth at $2,500 gold? It has to be worth more than $3 million. My guess is they are bouncing on the bottom and can't get any cheaper. Insiders (management and other mining companies) own 50%, so they should be able to avoid a hostile takeover. I just hope they are patient and

3 wait for the big payoff. If you like high risk / huge return speculation bets that have a legitimate chance, then you have to look at this one. They do have a number of red flags. The first is management. I never like it when the CEO is a geologist who has never built a mine. Next is the timeline until production, and what it will take to get there. They will need a few million for a PFS and permitting, but they are out of cash (expect significant dilution soon). This is a long term investment because they probably have two more years to complete a prefeasibility study. Thus, this mine will not begin producing until around The biggest risk is if the sell or option the project. They even mention in their current company presentation that selling to a major and keeping an NSR is an option. Ouch. I hope that doesn't happen. I'm betting on greed. Once gold prices rise and they realize that this is their golden goose, that they won't sell. At this time, the company is focusing on exploration because of financing issues. However, if gold prices rise, not only will their gold in the ground get valued higher, but investors will be much more inclined to help them finance the project. So, this isn't a slam dunk, but it has a lot of potential if gold prices rise. The Douay property could be one of the better undeveloped properties in Canada at this time. To be valued at $3 million is extremely low based on higher gold prices. After all, this could be a 5 million oz property, which are extremely rare. The 3 Ps Properties Do they have a flagship project? Yes, long life mine. Do they have a pipeline of projects for growth? No, but see next answer. Do they exploration potential to expand resources? Yes, plenty of drill targets on a large property. They are targeting 5 to 10 million oz on their Douay property. Is the grade and recovery rate satisfactory? The average grade is only.75 gpt, but they have high grade sections. Is the location satisfactory? Yes, Quebec is one of the best places to mine. They have no infrastructure issues. Do they own it? They own 100% for nearly all of the lease. A small portion (about 10%) in Douay northwest is only 75% owned. People Is it an exploration team? Perhaps. They are talking an behaving like a development team, but I consider this a question mark until they get financing. Do they have the experience to build a mine? I would say this is a question mark. This is the biggest risk. Do they have a track record for building mines? No.

4 Are they investor friendly and not always diluting? They will likely dilute to finance the feasibility study and perhaps to build the mine. Is the team large enough to build a mine? Probably not, but they will add resources as needed. Have you listened to a CEO interview? I have not. Are they cash focused? This is unknown until they make it into production. How much stock does management own? Management and two other mining companies own 50%, thereby preventing a hostile takeover. Does the website and company presentation provide adequate guidance and details? Yes. Projects What are the resources? 3 million oz at.75 gpt. Likely much more, based on the geology. What documentation has been released (PEA, Pre-feasibility Study, Feasibility Study)? A PEA was released in They want to produce a PFS, but are out of cash. What is the capex? $12 million for the starter pit. Plus, an underground option that bumps the capex up to $55 million. What is the after-tax IRR? Around 30%. What are the estimated cash costs and all-in costs per oz? Around $800 and $1200. Can it be financed? Unknown. How will it be financed (debt, equity, streaming)? Unknown. Share Structure Is it highly diluted? No, 75 million fully diluted shares. Likely to increase to pay for the pre-feasibility study, which will cost around $3 million. Timeline Risk How long until cash flow? My guess is around 5 years. Market Cap Size Is it too big or too small? At $3 million it is very small, which adds a lot of risk. Stock Chart Is this a good entry point? Yes, still bouncing on the bottom. Balance Sheet What is their cash/debt situation? Out of cash and no debt. Valuation What is their future market cap growth rate at $2,500 gold? 16,500% at 50,000 oz. (see below).

5 What is their future cash flow at $2,500 gold? $50 million annually at 50,000 oz. (50,000 x $1000). What are their future reserves valued at today? $2 per oz at 1.5 million oz. ($3 million / 1.5 million oz). Future market cap growth: Current Market Cap: $3 Million. Future Market Cap: 50,000 oz x $1000 oz = $50 million annual cash flow x 10 = $500 million Compare the two values and you get 16,500% increase. Is Aurvista Gold Mines highly undervalued? Yes, with a potential increase of 16,500% and future reserved valued at $2, it is highly undervalued. Score: 72 out of 100 Balance Sheet (Debt/Cash) 2 Cash Costs/All-in Costs 3 Exploration Potential 4 Management/Execution 2 Ownership Percentage 4 Locations/Taxes 5 Properties/Projects/Pipeline 5 Share Structure/Dilution 4 Risk 3 Upside Potential 4 Scoring: 1 = Poor, 5 = Excellent.