Eric O's Favorite Gold Miners

Anybody remember Meridian Gold?  They had such a nice mining company going that Yamana bought them out.  The next morning, realizing that they were now unemployed, a bunch of the Meridian guys decided to start their own company.  They raised a bunch of money, went on an acquisition and merger binge, and have put together a very nice looking company.  All of it is in Mexico.

Market Cap is $490 million, production from their flagship El Castillo Mine is around 70,000 oz per year.  Their advanced San Antonio project is looking to add 80,000 oz per year in 2013.  The La Colorada project is an effort to restart an older mine that had shut down.  I remember La Colorada from when Eldorado Gold first developed it.  I owned Eldorado at the time.  I never really understood why they sold it and went in a different strategic direction, but that's another story.  The new private owner of La Colorada couldn't handle the low gold prices, and closed the mine in 2002.   My gut tells me there is still a lot of gold around there.  In fact, the most recent news release talks about how the drilling is going so good there, they promptly doubled the budget.

These are all open pit, heap leach gold mines.  A different twist for Mexico where it seems like all we ever hear about is underground gold/silver mines.  I don't mind.  I'm betting those old Meridian guys know exactly what they are doing.

http://www.argonautgoldinc.com/i/pdf/May_2011_Resource_Update_Presentati...

Here's another one from last fall:

Wesdome looks to me to be another one of these quiet, boring, little plain vanilla miners very much in the mold of Claude Resources and Richmont.  More interested in going about their business than in pumping their stock.  They've been at it for 20 years.

Market Cap of $250 million.  For that you get two nice steady little Canadian mines, one in Ontario and one one in Quebec.  They will produce a combined 70,000 ounces in 2011.  They have excess milling capacity ready and waiting, and expansion in development on nearby ground.  They will drill ​167,000 meters this year, ​which seems astonishingly high for a company this size.  A lot of the junior exploration companies out there, that everybody gets all excited about, aren't drilling half that much.  Not a quarter that much.

Plus, ​they actually turn a profit!  ​A lot of the well known miners that everyone talks about, on this thread and elsewhere, are still losing money at $1500 gold.  Wesdome made a profit of $3.7 million in 2010, and $2.5 million already in the first quarter of 2011.  

Plus, each April for the last three years, ​they've paid a small dividend!  How many miners do that?  Not many.  Followers of Jim Sinclair should be impressed with that.

I don't own this one yet, but on the next dip, I will.

http://www.wesdome.com/documents/Wesdome-April-2011.pdf

Suppose I had $1B to throw around.   What would I buy?

If I'm stuck on Canada I could buy Kirkland Lake, OR Lake Shore, OR San Gold and end up with somewhere around 100,000 ounces of production with good looking growth prospects.

I could buy Aurizon with my $1B, and get more production.  But are the growth prospects as good?  Is the stock chart performance as good?  Good question.

I could leave Canada and take a chance on South Africa with my money by buying Great Basin.  South Africa is undervalued but it might stay that way forever.  Who knows?

Maybe Mexico?  If I buy both Timmins and Argonaut I'd get about 170,000 ounces of production and have about $250 million left over.

How about if I combine these small Canadians?  Put Claude, Richmont, and Wesdome together and you get about 200,000 ounces of current production, some growth in the pipeline, and again you'd still have $250 million left over.

Whether you go for the Mexico plan or the small Canadian plan, you could add in a lot of lottery ticket companies with your extra $250 million if you wanted to.

Of course this is just one way to look at these things, but it's food for thought.

I think the most important thing is about how "having cash on hand will give you the ability and ​the courage​ to act in down markets."

harfwit,

Thanks for the tip on PC Gold, and their Pickle Crow project.  Very much fits the thesis that I've been talking about.  Sounds a lot like my little pet Bralorne, but it's maybe a few years behind.  I like the fact that they've built a brand new 225 tpd mill.  That tells me they fully intend to mine it, not just drill it up and sell it.  I like that.  I'll be keeping an eye on this one.

http://www.pcgold.ca/vm/newvisual/attachments/805/Media/PCGoldPresentati...

Nice list you got there.