Soma Gold (SOMA.V): Fully funded, profitable, and undervalued

If there’s one thing we like to see more than a big, fully subscribed financing, it’s a big, fully subscribed financing that commits early, and bangs down debt into the bargain.

Soma Gold (TSX-V: SOMA / OTCQB: SMAGF) just closed in on a fully committed $15 million financing — and they did it early.

This is being done under the Listed Issuer Financing Exemption (LIFE), which means no four-month hold. The buyers of these units — each with a common share and a half-warrant at $2 — can trade them immediately, and if the stock runs above $3 for 30 straight days, those warrants expire in 30 days, forcing the market to decide fast whether it’s in or out.

Why SOMA? The numbers behind the momentum:

For the uninitiated, this is a company already producing gold, already profitable, and already paying down debt.

• Q1 2025 revenue: $27.9M, up 44% from last year

• Net income: $3.17M, flipping from a loss a year ago

• Adjusted EBITDA: $13.47M — enough to cover the full raise in just over a quarter

• Cash costs: US$1,261/oz vs selling price of US$2,903/oz — fat margins

• Debt reduction: $3.5M since January, targeting zero by 2028

If I’m honest, I thought about maybe ending the article here because, what more do you really need to know?

Gold is jumping in value, the stock has jumped from $0.45 to $1.25 inside a year, they’ve got two permitted mills — El Bagre running, El Limon just restarted — with 650 tpd capacity expandable to 1,400 tpd. That’s more than double current throughput without having to jump through permitting hoops.

But all of that does beg one very important question…

Why take $15m if you’re generating cash?

The $15M is fuel for expansion, not survival.

• $10m of the financing is converting existing debt into equity, taking that overhang off the books immediately

• The El Limon mill restart brings in ore from the Aurora patch, and Cordero excess, and higher-grade local artisanal supply

• Upgraded ore sorting tests could push production to 65-75k oz/year, with potential to 85-100k oz/year after a modest mill expansion

• Exploration is fully funded from free cash flow with 30,000m drilling annually, five rigs running, and new vein discoveries already making an impact

• The company has a district-scale land package along the Otú Fault to grow into, right beside Aris Mining’s Segovia operation

• Recent drill hits in areas like Venus Gap and Psyche 2 are showing multiple intercepts of well over 20 g/t gold — grades that translate directly into stronger cash flow.

Why the Market Should Pay Attention

Producers with cash flow, expansion potential, and exploration upside are rare. Soma stands out because it:

• Generates strong margins in a high-gold-price market

• Is expanding using existing infrastructure, as opposed to expensive up-front costing new framework

• Is reducing debt while growing rapidly

• Operates in a pro-mining jurisdiction with government support for its artisanal miner formalization model

If gold stays where it is, every extra ounce of production is pure margin. This financing just accelerates how fast those ounces stack up.

Now let’s be clear: All financings are dilutionary

Whether you’re fueling growth by borrowing money, raising money through equity sales, or taking it out of general revenue, all raises dilute investors.

But when you’re lowering your debt AND expanding your output, that’s intriguing.

Also intriguing that the people you owe money to would rather own your stock than your promissory note because, if anybody has done a lot of due diligence on a company, it’ll be the guys who loaned them $10m and have now chosen to own more of the company than be repaid.

The Valuation Gap

Compared to Colombian peers, Soma is trading at a fraction of the EV/EBITDA multiple — despite being profitable, debt-reducing, and on track for big production growth.

This gap isn’t because the market doesn’t know they’re profitable; it’s because the production growth story hasn’t fully registered. That could change quickly as the second mill comes online, ore sorting boosts grades, and more high-grade feed gets blended into the mix.

• EV/EBITDA around 3–3.8×, significantly lower than typical peers in gold mining, which often trade in the 8–12× range or more. This ranges is considered conservative, especially given Soma’s growth prospects.

• Price-to-Earnings (P/E) sits around 14×, while peers and broader mining industry averages sit much higher—often in the 50–60× range.

• Multiple fair-value models suggest Soma is deeply undervalued. One DCF-based forecast pegs fair value at around C$7 versus the current ~C$1.13 share price—a gap of ~80–84% undervaluation

Real talk: I deal a lot in companies that are early stage resource explorers, and even though a good number surpass SOMA’s current $113m market cap, very few get near the development point that Soma is at right now, with their own mills (plural), good dealings with the locals, permits in hand, debt being lowered rather than expanded, and gold being poured.

And all that IN A HOT GOLD MARKET.

Reducing risk is always a goal you should have front and center when you’re allocating your investment dollars.

But my challenge to you is this; where do you see the risk here?

— Chris Parry

FULL DISCLOSURE: No commercial interest