RE: Gold Price1 Feb 2026 13:13
Part 1 of 2 - from Flying Frisby this morning on SubStack this morning. If you're not a subscriber, I'd recommend you join.
Two years ago I became convinced Condor Gold was going to be taken out. The more I looked at it, the more convinced I became. I thought it was going to be a quick double in a matter of months and I ended up betting my entire ISA on the trade. I even put my kids’ ISAs in.
I wrote about here at the Flying Frisby. While I made it clear that it was my largest position, I never said quite how much I had gone all in on the trade. For all sorts of reasons. Never mind the cost to my net worth, if the trade hadn’t worked the cost to my already dubious reputation would have been enormous.
Then Condor didn’t get taken out, and I was stuck.
It was obvious that some kind of talks were going on, but that they had hit a wall.
I talked a great deal to fellow investors and could see how badly management wanted out and that gave me the strength of mind to persist with my position - which I was glad to do because, truth be told, I was stuck in an oversized position in an illiquid stock.
After a year, another company came out of left field, Metals Exploration (MTL.L). It took out Condor in a quite complicated deal, for which former CEO Mark Child must take a great deal of credit. Condor investors got some cash, some shares in MTL and some contingent rights, payable further down the road based on exploration and production success.
The deal has worked brilliantly as Metals Exploration’s share price has continued to appreciate - from around 5p at the time of last year’s takeover to around 17p today.
This morning we got its quarterly update which you can read in full here.
Some backstory: Metals Exploration has a highly profitable gold mine in the Philippines, Runruno, which is spitting out cash. However, Runruno only has a couple of years life left, before it depletes and it will be shut down in 2026. Hence MTL took out Condor for its “shovel ready” asset in Nicaragua, called La India.
MTL is now building that mine, funding it entirely out of cashflow from Runruno, and it will be producing later this year, before Runruno depletes.
In addition, MTL had an exploration property close to Runruno - Dupax - which it hoped could provide the ore needed to keep that Runruno mill operating for many years to come, obviating the need to shut that it down.
So to today’s update
We learn that Runruno continues to spit out cash. Q4 saw US$40.0 million of free cash flow from $64 million of sales. Total production was 16,000oz at a recovery rate of 84%.
50-60,000oz of production are forecast for next year at a cost of (likely) $1,500-1,700/oz. The gold price is already 25% higher than Q4’s average selling price just below $4,000/oz. It makes a lot of money.
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