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Favorite Junior Mining-related Shares

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Favorite Junior Mining-related Shares

Some stocks on my "Possible Buy" List

===================================

 

(Some names on this list may change, without warning - there's a Risk with some of these names)

 

Some friends have asked me to suggest some of my favorite Junior stocks for a "closer look" and possible inclusion in their portfolios.

 

I do think it is a good time to be seeking out opportunities, for the following reasons:

 

82187790.png

 

+ The Gold shares -to- Gold Ratio is very cheap: GDX-$44.28 / GLD-$152.83 = 29.0% : Chart, above

(I am told that Barrons did a story on this recently, and as of the May low, the Ratio of Goldstocks to Gold was at a level that has only been seen 4X in the past 100 years : A twice in a lifetime low?)

 

+ Rod McEwen, former CEO of Goldcorp and an astute analyst of the Gold market expects Gold prices to reach at least $5,000 before this long cycle is over. He has also presented charts showing the 4-year "election cycle" in XAU (a long-standing Gold stock index.) They show something interesting: a drift down into the end of the election year, and a sharp jump the year after. The AVERAGE gain in gold stocks for the year after the election is over 100%. McEwen thinks it is possible that we have already seen the low in Gold and Gold stocks for 2012. The lows may be retested, but he expects strong support at about $1520. (Note: he thinks this level is similar to what we saw in the last long cycle, when Gold drifted down to $250 per ounce, which was xxx% of the Gold company cash cost of $160. Current cash costs are pushing up to near $1000, and maybe higher than that on an "all-in" basis.)

 

+ XXX

 

No doubt, Junior mining and exploration shares can go lower. In fact, I would not be at all surprised if the recent May lows were tested once again in the weeks and months to come.

 

=== Some of my favorite Mining-related shares / as of Late June 2012 ===

 

 

DM.t : $1.79 +$0.02 MktCap: $224.8mn ($1.71 - $2.97) support: $1.75

Duluth Metals Ltd. (TOR) ... 5yr-update : Copper/Nickel development

tor1i.png

 

EDV.t : $2.22 -$0.07 MktCap: $544.0mn ($1.71 - $2.74) support: $2.00

Endeavour Mining Corp. (TOR) ... 5yr-update : Gold Mining & Dev'l

tor5.png

 

FRO.t : $0.50 +$0.03 MktCap: $44.78mn ($0.43 - $2.50) support: $0.45

Frontier Rare Earths Ltd. (TOR) ... 2yr-update : Rare Earth development

tor2g.png

 

LAM.t : $0.86 -$0.01 MktCap: $60.86mn ($0.61 - $1.61) support: $0.70

Laramide Resources Ltd. (TOR) ... 5yr-update : Uranium development

tor3.png

 

MUX.t : $3.18 +$0.24 MktCap: $568.7mn ($2.02 - $6.86) support: $2.02

McEwen Mining Inc. (TOR) ... 5yr-update : Gold dev'l & Exploration

tor4.png

 

MXOM $0.07 -0.002 MktCap: $5.04mn ($0.06 - $0.25) support: $0.07 ?

Pan American Goldfields Ltd. (OBB) ... 5yr-update : Gold Explor., small Prod.

usa1d.png

 

SSRI $11.41 +$0.10 MktCap: $921.3mn (10.06 - 31.75) support: $10.00

Silver Standard Resources Inc.(NASDAQ) ... 5yr-update : Silver Dev'l., some Prod.

usa2t.png

===

 

Others on my current WatchList:

======

NSU / Nevsun

XXX / Rye Patch

XXX / Continental Gold

IAU.t / Interpid /

???

 

HERE's THE RISK that I am concerned about:

Some of these stocks could represent "Value Traps" - They all look cheap, but they could stay cheap.

Moreover, most of the companies have Discovered and Defined valuable resources,

(Indeed, most of them I have defined as "Development companies".)

The Developers WILL NEED TO RAISE MONEY to develop those deposits into mines.

If (because of disruptions in finance), that money is not readily available at affordable

interest rates, then some of these companies may face a continuing cash drain.

 

I want to add companies to the list with already have positive cash flow.

Thus, I want more Producers, with earnings, and even dividends.

 

(NOTE: I plan to cull this list in the next few days, and some of the companies on the List may change.)

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( Looking at Stock Indicies, which are most relevant for Junior stocks )

 

CDNX / Canadian Venture Index ... 5yr-chart : 1yr-D : 10day

 

31278140.png

 

GDXJ / Market Vectors Junior Gold Miners ETF ... 3yr-chart : 1yr-D : 10day

 

62274942.png

 

The Junior Gold Miners have already shown a nice bounce, and is trading above its May low while the CDNX is not.

Why, the difference?

Probably because most the GDXJ stocks are in production, and are producing cash flow, and many of them even pay dividends. The CDNX are mainly Explorers, and many of them will go on burning cash, until they can find a deposit, and put it into production - Or sell out to an established company that wants to develop their deposits.

 

I reckon the CDNX Index may need to see a rising tide of discoveres, and/or companies being acquired, to get their share prices off the present low levels.

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Instead of the list given in the Original Post,

I want to shift my focus a bit -

And focus more PRODUCERS with CASH FLOW and EARNINGS

 

These companies are CHEAP now, and can survive and even thrive

if pressure remains on companies Without Cash Flow, burning away their cash.

 

=== ===

Top Seven Reasons Gold Producers Will Soar

 

June 26, 2012 by Gold Editor / SOURCE: [Casey Research] -

 

For the past eighteen months, gold stocks have been pummeled.

 

They showed some life from mid-May to mid-June – GDX, the gold miner's index, was up 21%, while gold rose 5.5%. That bounce was exciting, but they've still got a lot of lost ground to make up. Since January 1, 2011, GDX is down 28%, while gold is up 10%.

 

So what's going to move these darn stocks? Will their day ever come?

. . .

 

Let's review the core reasons why gold stocks are the place to invest right now, and why I'm convinced much higher prices will be had before this bull market is over…

 

Reason #1: Gold stocks have leverage to gold bullion prices.

In spite of what's occurred recently, history is on our side here, as the track record of precious metals equities demonstrates they can reward patient investors tremendously. They rose:

 

■ 950% from January 2001 to January 2008.

 

■ 700+% from 1970 to January 1980, including 289.5% in the last thirteen months of that period.

 

■ 211% in less than 24 months in the mid 1990s.

 

■ Even during the Great Depression, the two largest producers at the time – Homestake Mining and Dome Mines – rose 474% and 558% respectively.

 

■ It's normal for gold stocks to demonstrate this kind of leverage to gold. It would completely contradict the historical pattern – and common sense – for gold stocks remain where they are until this bull market ends.

 

Reason #2: Gold stocks are grossly undervalued.

Reason #3: Gold stocks are universally under-owned.

Reason #4: All that cash has gotta go somewhere.

Reason #5: Physical gold may become hard to get.

Reason #6: Gold has a lot further to climb.

Reason #7: "The boat" has a leak.

 

/detail: http://www.caseyresearch.com/cdd/top-seven-reasons-gold-producers-will-soar

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My own view is that we're going back to 2008 lows.

So one should keep at last half one's powder dry if one has any powder left?... What level would convince you that the train had left the station for new highs?

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Instead of the list given in the Original Post,

I want to shift my focus a bit -

And focus more PRODUCERS with CASH FLOW and EARNINGS

 

I agree Bubb. The juniors haven't fallen much more than the mid-tier and senior producers. We're looking at an easy double on producing gold miners when valuations return to normal, and many are paying comfortable dividends now. No reason to take on the extra risk of holding a cash-flow negative junior. Here are the profitable names I'm holding:

GORO (2.8% yield)

NEM (2.9% yield)

NSU (3.0% yield) (and buying back stock like crazy)

ASR.to (0% yield)

SLW (1.4% yield)

SVM (1.7% yield)

HL (2.0% yield)

SVL.v (0% yield)

 

See my tabulations on 1st quarter earnings for gold producers:

Miner 1Q Earnings Tabulation

This is about a month old but prices haven't changed much since.

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I agree Bubb. The juniors haven't fallen much more than the mid-tier and senior producers.

We're looking at an easy double on producing gold miners when valuations return to normal, and many are paying comfortable dividends now. ...

Thanks for the suggestions, Ace.

I shall take a closer look at those companies

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Instead of the list given in the Original Post,

I want to shift my focus a bit -

And focus more PRODUCERS with CASH FLOW and EARNINGS

 

These companies are CHEAP now, and can survive and even thrive

if pressure remains on companies Without Cash Flow, burning away their cash.

 

=== ===

Top Seven Reasons Gold Producers Will Soar

 

 

Tell you what else was missed. Sector consolidation.

 

A fair few producers are now appearing so cheap, they will be gobbled up, as in the case of one of my old favourites on Friday, Allied Gold. Used to like this as it was a little ISA play, with ASX,LSE and TSX listings.

 

However Mark Caruso's outfit have had a few problems at Simberi, which dogged performance considerably more than just a little weakness in sector sentiment. Anyone that bought in recent will no doubt be pleased with the St Barbara proposal to acquire Allied. Terms of the merger will leave St Barbara and Allied Gold shareholders owning 67% and 33% respectively of the combined.

 

Nice 80% ish premium to ALD holders on Friday. Painful for those that held longer and expected things might turn around. Seems a cheap sell-off to me, one wonders if there are more problems than ALD have let on?

 

Anyhow suspect there will be many other small producers acquired for a fraction of their former prices.

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Tell you what else was missed. Sector consolidation.

A fair few producers are now appearing so cheap, they will be gobbled up....

Indeed - as FBB has noticed too...

 

(1)

Bob Hoye - bullish on gold stocks: ‘Pigs Will Fly’ .. June 15th, 2012

MP3: http://www.podbean.com/podcast-download?b=2516&f=http://commoditywatch.podbean.com/mf/web/s5p6c/2012-06-14-GMYF-DF-E-32.mp3

 

Dominic Frisby talks to market historian Bob Hoye of Institutional Advisors. Bob is bullish on gold stocks ...

 

(2)

A Once In A Generation Opportunity .. June 7th, 2012

MP3: http://www.podbean.com/podcast-download?b=2516&f=http://commoditywatch.podbean.com/mf/web/zq3y/dfjw01062012.mp3

 

The cynic is back. Dominic Frisby talks to veteran private investor, Dr John Wolstencroft. The good doctor is in a positive frame of mind as he presents 18 thoughts on the seniors - and declares this is a once in a generation opportunity.

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DANCE OF THE INDICIES - Looking better

 

GDXJ/Gold Juniors versus GDX/Gold Majors and CDNX-Canadian Venture Co's ... update

 

aa2a.gif

 

Notice how 2/3 of these made Higher Lows on Thursday:

 

Index : Date / Low-#1 .. Date / High- .. Date / Low-#2 :: --up-- : down : retrace

GDX- : 16May/$39.08 .. 06Jun/$48.38 .. 28Jun/$42.60 .. : +$9.30 : -$5.78 / 62.15%

GDXJ : 16May/$17.37 .. 06Jun/$22.18 .. 28Jun/$18.00 .. : +$5.17 : -$4.18 / 80.85%

CDNX : 16May/$1,215 . 29May/$1,330 . 13May/$1,154 . : +$115. : -$176 / 153.0%

 

GDX retraced only 62.15% of its move up - That is close to Fibonacci 61.8%

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=== Some of my favorite Mining-related shares / as of Late June 2012 ===

 

DM.t : $1.79 +$0.02 MktCap: $224.8mn ($1.71 - $2.97) support: $1.75

Duluth Metals Ltd. (TOR) ... 5yr-update : Copper/Nickel development

tor1i.png

 

EDV.t : $2.22 -$0.07 MktCap: $544.0mn ($1.71 - $2.74) support: $2.00

Endeavour Mining Corp. (TOR) ... 5yr-update : Gold Mining & Dev'l

tor5.png

 

FRO.t : $0.50 +$0.03 MktCap: $44.78mn ($0.43 - $2.50) support: $0.45

Frontier Rare Earths Ltd. (TOR) ... 2yr-update : Rare Earth development

tor2g.png

 

LAM.t : $0.86 -$0.01 MktCap: $60.86mn ($0.61 - $1.61) support: $0.70

Laramide Resources Ltd. (TOR) ... 5yr-update : Uranium development

tor3.png

 

MUX.t : $3.18 +$0.24 MktCap: $568.7mn ($2.02 - $6.86) support: $2.02

McEwen Mining Inc. (TOR) ... 5yr-update : Gold dev'l & Exploration

tor4.png

 

MXOM $0.07 -0.002 MktCap: $5.04mn ($0.06 - $0.25) support: $0.07 ?

Pan American Goldfields Ltd. (OBB) ... 5yr-update : Gold Explor., small Prod.

usa1d.png

These have done OKAY = more than Double the market indicies

 

 

Stock : 25June : 23Nov : Chg. / pct.

====

DM.t- : $ 1.79 : $ 2.38 : $0.59 +33.0%

EDV.t : $ 2.22 : $ 2.27 : $0.05 +2.25%

FRO.t : $ 0.50 : $ 0.60 : $0.10 +20.0%

LAM.t : $ 0.86 : $ 0.81 : -0.05 -5.81%

MUX.t : $ 3.18 : $ 3.74 : $0.56 +17.6%

MXOM : $ 0.07 : $0.113: $.043 +61.4%

====== ====== : == Ave. : ===== +21.4%

SPY- : 131.32 : 141.35 : 10.93 +8.32%

GDX- : $45.16 : $48.74 : $3.58 +7.93%

 

NEWS on Duluth

=====

DULUTH METALS ANNOUNCES MOBILIZATION OF A FOURTH DRILL RIG ON EXPLORATION PROPERTIES

 

 

TORONTO, Ontario, November 26, 2012 – Duluth Metals Limited (“Duluth Metals”, “Company”) (TSX: DM) (TSX:DM.U) is pleased to announce that a fourth drill rig has been mobilized on Duluth Metals 100% owned exploration properties in the Duluth Complex, north-east Minnesota. This fourth drill rig is currently positioned on the northern part of the East Shore property.

 

"Having several good targets south of the Nickel Lake Macrodyke, we have decided to mobilize a fourth rig allowing us to target two drills on the south-east side of the contact." commented Vern Baker, President of Duluth Metals. “Our geological team is aggressively working on the exploration properties with four rigs.”

 

The primary exploration focus on the Nor'East and East Shore Properties is for copper-nickel-PGM mineralization, similar to other known deposits in the Duluth Complex, (e.g., the Maturi Deposit and the deep portions of the Mesaba Deposit). The Nor'East property is situated at the junction of the Nickel Lake Macrodike and the South Kawishiwi Intrusion and represents a prime target area for Duluth Metals. Geological modeling indicates that the property has the potential to host a "Voisey's Bay" type massive sulfide target. The three initial drilling target areas are:

  • Target Area 1 - The Nickel Lake Macrodike area
  • Target Area 2 - Two miles south of the Nickel Lake Macrodike
  • Target Area 3 - The Harris Lake/Heart Lake area approximately four miles S of

35]
the Nickel Lake Macrodyke.

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