Everything seems to be on track at Aurcana. La Negra mill expansion and Shafter construction.
http://finance.yahoo.com/news/aurcana-reports-record-silver-production-1...
Eric O's Favorite Gold Miners
April 26, 2012 - 8:10am
#2003
Aurcana
April 26, 2012 - 9:41am
#2004
Allied Nevada
My latest thoughts on ANV went out on Main St.
April 26, 2012 - 1:19pm
#2005
Viva Aurizon!
Chart on Main St.
April 27, 2012 - 8:46am
#2006
Trelawney snags a buyout
Iamgold pays up and buys Trelawney. OK, I wish them luck, since I was never able to get comfortable with Trelawney.
http://finance.yahoo.com/news/iamgold-expands-gold-production-pipeline-1...
For those who were in the stock, congratulations, and here's your buyout song!
April 27, 2012 - 8:51am
#2007
Latest Sprott bets
April 27, 2012 - 2:17pm
#2008
One last post on Main, and
One last post on Main, and now I'll quit flogging this horse for a while.
April 29, 2012 - 11:29am
#2009
Aurcana Warrants - Eric?
Hey Eric,
Traffic on the miner forum is increasing which to me signals a possible bottom. As I have said before, when everyone on the forums is busy high fiving each other I usually take some off the table (never enough however). Conversely, when everyone is crying in their beer mugs and the traffic is low I start to buy again (never enough again)
.
Aurcana is a great story and was barely dented on this recent rout. This stock is dead cheap if the hit even half of their production projections for the next year.
I bought some of the warrants (AUN.WT.V) when they launched on March 30th and have done well.
For anyone that likes the AUN story and feels that the miners, particularly the juniors could have a nice run to the end of the year, these warrants offer some leveraged upside to one of the miners that will likely outperform.
Just remember there is extra juice in these warrants for the upside and that goes equally as well for the downside.
Eric - what are your thoughts on the warrants?
April 29, 2012 - 11:37am
#2010
Levon
Hey Eric,
Traffic on the miner forum is increasing which to me signals a possible bottom. As I have said before, when everyone on the forums is busy high fiving each other I usually take some off the table (never enough however). Conversely, when everyone is crying in their beer mugs and the traffic is low I start to buy again (never enough again).
Aurcana is a great story and was barely dented on this recent rout. This stock is dead cheap if the hit even half of their production projections for the next year.
I bought some of the warrants (AUN.WT.V) when they launched on March 30th and have done well.
For anyone that likes the AUN story and feels that the miners, particularly the juniors could have a nice run to the end of the year, these warrants offer some leveraged upside to one of the miners that will likely outperform.
Just remember there is extra juice in these warrants for the upside and that goes equally as well for the downside.
Eric - what are your thoughts on the warrants?
Yes, I think your reading of sentiment is spot on.
As for Aurcana, assuming startup at Shafter goes according to plan, then that should vault Aurcana into a similar silver production size as Endeavour (which I love), at about half the market cap. I like those odds. 
As for warrants, hey if you want or need extra leverage, that is one way to go about it. But for many mere mortals like myself, junior miners are already volatile enough to give plenty of gray hairs. To each their own.
April 30, 2012 - 9:07am
#2011
Location Risk
A morning news item got me thinking about geopolitical risk, and location risk more broadly, today.
The news at hand is that the Chilean Supreme Court has suspended a key permit for the Goldcorp/New Gold El Morro Project.
http://finance.yahoo.com/news/gold-announces-chilean-court-decision-1100...
All along, I've stated that I'm biased toward Canada, Mexico, and Nevada. I think I've been well served by that. Off the top of my head, over the past year, we've seen permit shenanigans in Chile, nationalization noises in Bolivia, Peru, and Argentina, and strikes and power outages in South Africa. A coup in Mali. Extra resource taxes in Australia. You can always count on the Russians to rob you blind. In most other places in the world, the governments are not the least bit shy about telling you how much of the mine they will own, and by the way, you have to foot the entire bill for construction, thereby making the whole enterprise hardly economic at all.
These would be more properly considered "Geopolitical risk", but I'm thinking broader than that. Are there really going to be long term economically successful mines built in Nunavut when the price of energy is so ghastly and only getting worse? Are giant swaths of Alaska, British Columbia, or the Yukon really any better? How about the northern reaches of Quebec, Ontario, or Manitoba? Mongolia, anyone? My basic test is that if you have to fly or helicopter into your drilling site, my interest level stays stuck in low gear. The broader term floating around in my mind is "Location Risk".
Nothing is absolutely safe. But I've been reaffirming my biases toward producing mines in recent weeks, partially for these very reasons. If the mine is operating, or at least well along in construction, it means that they already have all the permits. It means that whoever needs to get bribed has already been bribed. It means they've already bought all the steel, and built all the roads, and worked out the power supply. It's not foolproof. Just ask Agnico-Eagle about Meadowbank, and the energy challenges in Nunavut that are eating their lunch. But it's a start.
For the USA, I'm sticking with Nevada. Preferably "brownfield" developments, those that have had mining activity and all the permits at some point in the past. If you are starting off with a "greenfield" project you can still be held up for a long time waiting for permits even in Nevada. Anywhere else in the USA, I'm OK with it if it's already running, but for new development projects...well...good luck with that.
In Canada, I'm biased toward the long time historical mining areas of Ontario and Quebec. From Val d'Or to Kirkland Lake to Timmins to Wawa to Red Lake. Casa Berardi and Detour Lake are a slight stretch north, but outside of this area, it can get dicey. For development projects, if they don't have road and power access worked out, I lose interest.
In Mexico, there can also be political and infrastructure challenges, but the overall success of the miners in Mexico demonstrates that these things can be overcome. When looking at a map location for a mine or project, the more other mines that are in the area, the more I like it. Anytime I see Durango or Zacatecas State, or a state bordering those, I'm pretty comfortable. Way down in Chiapas? No thanks.
Well, that's my morning ramble for today. Thanks for reading.
April 30, 2012 - 9:18am
#2012
Aurcana
slightly nervous about aurcanas ability to demonstrate production visibility at la negra ....but then la negra isnt fully in the price anyway at the moment. Interesting stock all the same. Legacy Silver Standard assets do have a habit of hitting problems in my experience, but Shafter is thankfully going to produce Dore.....
April 30, 2012 - 10:22am
#2013
Quick Follow Up
NGD and GG both spanked on the news. The smaller NGD especially, down 7%. No effect on my portfolio though.
April 30, 2012 - 11:16am
#2014
Size Matters
I'm also concerned with trying to stay in what I consider a "sweet spot" in terms of market cap size of the companies that I'm involved in.
As much as I love the producing miner, there's still enough of an old prospector in my heart to hold out hope that a big drill hole can come along and cause a nice pop in my stock. When a company gets too big, that becomes impossible. What kind of drill hole would it take to move Goldcorp? One that isn't even possible, that's what kind. I'm pretty much setting an approximate upper size limit of around $5B. NGD ($4.3B) and AEM ($6.7B) are the two that I'm always struggling with in this area.
Another problem with companies any bigger than this is that they invariably run afoul of my Location Risk concerns as stated in the post above. Still another problem with bigger companies, is that it is very difficult for them to grow. If you are producing a million ounces per year, how do you replace that? Extraordinarily difficult in this world. But if you are producing 100,000 per year, then opportunities to double your production are out there.
Miners can be too small for my tastes as well. The smaller the company, the proportionally higher the administrative costs, in my view. A 20,000 ounce per year gold miner is going to be a barely breakeven proposition for the company as a whole, no matter how nice it is. My informal cutoff is in the neighborhood of 40,000-50,000 ounces per year. Such a company should at least be able to continue as a going concern, keep drilling, and fulfill the role as a long term call option on gold. Primary silver miners are harder to find, and so I'll go as low as the 1,000,000 ounce per year range, grudgingly, and only because the larger silver miners might eventually need to buy them.
Another way that miners can be too small is the lack of liquidity. It drives me mad to see some of these pennies trade so few shares in a day. Sometimes ZERO volume at all. In up markets or down, if I want to sell something, I want a stock that is liquid enough that there is an honest bid available, one that is not merely the least stinky stink bid in the entire market. Buying or selling, the bid-ask spreads can be atrocious. I'm tired of paying for private school for the kids of the market maker boyz in Toronto. I don't have a hard and fast market cap rule for this. It's kind of a stock by stock thing, but $100M is a nice round number that comes to mind.
Financing is another issue. It seems like it takes something like $5M to do a really decent drilling program these days. If your market cap is only $25M to begin with, then raising $5M has a pretty hefty dilution factor to it. But if you are up north of $100M, then it doesn't feel so bad. Not to mention that if you are already producing, and cash flow positive, then maybe you don't need to issue more shares at all.
So, a range of $100M to $5B feels about right to me, more or less.
April 30, 2012 - 11:19am
#2015
Working on a "List"
The above posts about Location Risk and Size Matters, are really the beginnings of gathering my thoughts to finally put together a "List". Hopefully get started on that tomorrow.
April 30, 2012 - 11:32am
#2016
Looking forward to
Looking forward to the "list" Eric, and I agree with basically everything you said. The only thing that I can say is that the recent downturn in this sector did not spare the producers much better than the explorers? I like a combo of both myself, time will tell!!
April 30, 2012 - 11:45am
#2017
zman
True, producers have been slaughtered just the same. This gets into the emotional aspects of investing in this area that I laid out here.
This is an area where we each are going to be very different for sure. Explorers keep me up at night, and producers don't, and for me that makes all the difference. It needn't be that way for you or anyone else, but it is for me.
I'm thinking of a List of about 20 producers, and also a list of about 20 developers. People can use those lists as they choose, but for me personally the developers list will function more as a watch list, where I'll be looking for concrete advancement toward production. For the penny explorers, I wholeheartedly endorse sending folks over to BOG's thread.
April 30, 2012 - 12:30pm
#2018
Re: Size matters
Principles I mostly agree on, though I feel less restrictive for producers outside of North-America. But you do raise the issues (Political violence in Mali, Eskom power outages in SA) that threaten viability of a mining operation.
As you often hear: elephants don't run. I have a (relatively small) position in large cap gold miners and invariably they have been laggards over the last year. But then again, only few of my mid-tier picks really made it.
A minimum $100 M market cap for explorers brings you in a different league than what Bag of Gold is aiming at (max. $75 M at inclusion).
April 30, 2012 - 3:30pm
#2019
Pretium---o my
VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 30, 2012) - Pretium Resources Inc. (TSX:PVG)(NYSE:PVG) ("Pretivm") is pleased to report initial results from the 2012 drill program at its high-grade gold Brucejack Project in northern British Columbia (see Table 1 below for assays).
Selected highlights from the Valley of the Kings include:
-- Hole SU-316 intersected 9,110 grams of gold per tonne over 0.5 meters (266 ounces gold per ton over 1.6 feet) and 1,035 grams of gold per tonne over 0.8 meters (30 ounces gold per ton over 2.6 feet); -- Hole SU-318 intersected 1,490 grams of gold per tonne over 0.7 meters (43 ounces gold per ton over 2.3 feet).
May 1, 2012 - 9:06am
#2020
BRD Latest Presentation
Eric, looking for a "next big hole", I found this tidbit on the
latest BRD presentation, page 20, "Exploration Upside" Black Fox Underground Mine chart shows the following:
2004 surface drill hole, on the extreme east end of property,
intersected 20.85 gpt over a true width of 4.98 meters.
IMHO a good start for that next hole.
Audi.
May 2, 2012 - 9:02am
#2021
Eric O's List of Favorite Miners
Time to get started on this List!
I'm pondering two separate lists, one for producing miners, and one for development projects. The crossover point is where a company has a deposit fully financed and under construction. I'm going to list those on the Miners list.
Before getting started, this would be a good time to review the parameters I've laid out as to where my biases lie.
And with that, let's get going!
AuRico Gold: Recent asset sales are designed to lower overall average costs and improve financial metrics. The leaner, meaner AuRico now has two mines in Mexico, the start up of the Young-Davidson Mine in Ontario, and a significant cash hoard. Current production is around 234,000 oz/yr. 2012 guidance is 323,000 to 363,000, as YD gets up and running. If you look out to 2014, company guidance is 450,000 to 530,000. AUQ is hoping that YD alone will be producing 250,000 by 2016. These are some eye popping growth projections, though much depends on a successful YD start up, which is never a sure thing. Silver fans should note that the Ocampo mine has a significant silver component added in to the totals as Au equivalents.
Aurizon Mines: A favorite buyout candidate as far as I'm concerned. A single top quality underground mine in Quebec, and lots of cash. Still a great buy even if you value all their development projects at zero. Casa Berardi should keep cranking out about 165,000 per year, for years and years to come, at below average costs.
Endeavour Silver: Solid silver miner in Mexico. The recent El Cubo acquisition from AuRico has gotten mixed reviews, but since El Cubo is only 10 km from their existing operations I'm fine with it. If anybody can straighten things out at El Cubo, Endeavour can. Current production is around 5.6 million oz AgEq. When the El Cubo deal closes, they should be more like 7.6m AgEq, with about $50 million cash left over to work with. Endeavour has long wanted to buy Great Panther's adjacent operations, but El Cubo is the next best thing.
First Majestic Silver: Top shelf silver miner in Mexico. They've been running around 8 million oz AgEq per year, with plans to double that by 2014, largely on the back of the steady start up and expansion of the Del Toro Mine. Recently acquired Silvermex on the cheap, just days after SLX reported some terrific drill holes. When the deal closes, SLX will be adding around 1 million oz Ag to First Majestic's annual totals, for starters.
Kirkland Lake Gold: Steady resurrection of a historic Ontario motherlode that logged past production in excess of 20 million ounces. Currently producing around 80,000 per year, at above average costs. Mill expansions are underway that should vault KGI to 250,000 to 300,000 per year by 2014, with costs improving.
That's it for now. More additions as time allows. Now, let's get out there and make some money! 
Comments for "Eric O's Favorite Gold Miners"FREE NEWSLETTER
Keep up with the latest TF Metals Report news. Subscribe to "This Week in Turdville" today!
Feed The Turd
Hat Tips - Comments
Recent Comments
This Month's Leaderboard
| Username | Hat Tips Earned | |
|---|---|---|
 | DrkPurpleHaze | 2542 |
 | Xty | 1743 |
 | Mr. Fix | 1636 |
 | Spartacus Rex | 1510 |
 | The Watchman | 1312 |
 | Bollocks | 1304 |
 | Cry Me A River | 1304 |
 | ag1969 | 1171 |
 | tyberious | 1030 |
 | Green Lantern | 827 |
Talking Bre-X nostalgia over at the SpeakEasy. Penny miner history at it's finest! Required reading, all the usual suspects involved!
http://www.tfmetalsreport.com/comment/157980#comment-157980
__________________
Don't Fight the Tape.
Sitting around complaining that the market is "wrong" is an excellent way to keep losing money.