November 2, 2025
HISTORY AND PHILOSOPHY OF GOLCONDA GOLD
The Chairman and CEO of Golconda Gold is Ravi Sood. In a recent interview with Ian Cassel, founder of the MicroCapClub, Sood explained his history and the history and philosophy of Golconda.
Sood worked in wealth management. Then he sold his wealth management company 15 years ago.
IAMGold approached Sood about the Mupane gold mine in Botswana. IAMGold had bought the property for $240 million. But when they approached Sood about selling it to him, gold was only $650 an ounce. Sood looked at the mine, and it had permitting and infrastructure in place. So Sood was able to buy the Mupane gold mine for $10 million in cash, a $5 million note, plus some equity. Sood soon bought back the equity.
Sood managed the Mupane gold mine for ten years. Because the gold price during that time was relatively low, they didn’t make any profits. However, Sood managed the mine very conservatively, and gradually increased his equity stake, never doing anything dilutive during those ten years. As Sood explains today, they were very disciplined and funded their operations only out of their own cash flow. They didn’t raise $1 of equity. This philosophy later became the DNA for Golconda today.
In 2020, Sood was able to buy the Galaxy gold mine in South Africa out of a restructuring. Again, all the permitting and infrastructure was in place. Sood bought it for a nominal amount. Similarly, Sood bought the Summit gold mine in New Mexico. Again, the licensing and infrastructure was already in place.
Also in 2020, Sood sold the Mupane gold mine for $1 dollar plus the assumption of $19 million in debt.
So now they were focused on the Galaxy gold mine in South Africa and the Summit gold mine in New Mexico. They had the same philosophy as when they managed the Mupane gold mine: never dilute shareholders. Since Sood was the largest shareholder at around ~30%, he was highly incentivized never to dilute shareholders.
At first, because of a combination of relatively low gold prices and their philosophy of self-funding – i.e., funding operations out of cash flow – progress at Galaxy was slower than forecast and Summit was idle. But fast forward to today, with gold at $4,000, and the Galaxy mine – although behind schedule – is just printing money and they have significant reserves – M&I resources are 941,000 oz Au at 2.79 g/t while Inferred resources are 1,372,000 oz Au at 2.62 g/t. (Galaxy has been producing gold since the 1870s and will be producing for another 50-100 years.)
Summit only appears to have low reserves because those reserves were measured when the gold price was $650. With gold at $4,000 (or $3,000 if it declines), the reserves at Summit are substantial.
The plan for the Galaxy mine is to take it from its current 12,000 ounces per year up to 35,000 ounces per year in 2031. Sood said people might ask why they don’t (i) ramp more quickly or (ii) take it up to 100,000 ounces per year. Sood explained that the 5-year ramp to 35,000 ounces per year was carefully designed to maximize NPV based on risk, based on the configuration of the ore bodies, and based on free cash flow. Sood reiterated that as an owner of 30% of Golconda’s shares, he’s only interested in maximizing the NPV on a risk-adjusted basis. “Slow and steady win the race,” said Sood.
One final note about the Galaxy mine: 26% of net profits go to black empowerment, as dictated by law in South Africa. The funds are mainly used for micro-finance for female entrepreneurs in South Africa.
As for the Summit gold mine, the plan is to start operations in Q2 2026 and then gradually ramp to 23,000 ounces a year in 2031.
Adjustments will be made along the way, always with an eye to maximizing NPV on a risk-adjusted basis. Also, at the right price, management will spinoff Summit into a stand-alone U.S. gold and silver mine.
If they don’t spin off Summit, then Golconda will be producing 58,000 ounces in 2031. If gold prices remain high, and if they don’t spin off Summit, then it’s likely that Golconda can increase production from 2031 going forward.
Sood reiterates that he owns 30% while other managers and their families own 12.2%. So total insider ownership is 42.2%. Sood observes that he or a manager may make a mistake, but outside investors can rest assured that every decision management makes is with an eye to maximizing NPV on a risk-adjusted basis. Their equity ownership in the company dwarfs their salaries, and so their incentives are clear and well-aligned with otherwise shareholders.
Sood now describes Golconda as “an overnight success 15 years in the making.”
VALUATION
Note: All figures are in U.S. dollars unless otherwise indicated.
The stock price is $1.36. The market cap is $93.8 million, while EV is $95.2 million
Cash is $1.1 million. Debt is $2.5 million.
At $4,000 gold, revenue for 2026 is $72 million, EBITDA is $30 million, net income ia $18.4 million, and cash flow is $27.8 million.
Note: Even at $3,000 gold, within 3-4 years the multiples will be exceptionally low.
Here are the multiples based on 2026, assuming $4,000 gold:
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- EV/EBITDA = 3.17
- P/E = 5.10
- P/B = 2.76
- P/CF = 3.37
- P/S = 1.32
PEG = 0.34 (Growth should be at least 15% a year over the next four years.)
ROE is 13.6%, which is OK. But with $4,000 gold, ROE will be much higher. TL/TA is 30.2%, which is very good.
The Piotroski F_Score is 7, which is good. Also, this score will be higher if gold prices remain near $4,000 an ounce.
Insider ownership is 42.1%, including 30% by Chairman and CEO Ravi Sood.
Intrinsic value scenarios:
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- Low case: Gold prices could decline to $2,000 or less, perhaps due to a bear market for stocks or a recession, or for some other reason. Golconda Gold earnings would be much lower than normal and the stock could decline significantly.
- Mid case: With gold at $3,500, the NPV per share of Golconda is $3.59, which is over 160% higher than today’s $1.36.
- High case: With gold at $4,500, the NPV per share of Golconda is $7.23, which is 430% higher than today’s $1.36.
RISKS
Gold prices could decline to $2,000 or less, perhaps due to a bear market for stocks or a recession, or for some other reason.
Political risk for a gold miner in South Africa is quite low, but not zero.
There could be execution problems.
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