Eric O's Favorite Gold Miners

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Wed, Jun 22, 2011 - 8:45pm
Eric Original
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U.S. Gold (UXG)

This is a tough one. Rob McEwen owns huge chunks of both UXG and Minera Andes and if he says he wants to merge them, then you can bet it's gonna happen. Any analysis needs to treat it as a fait accompli.


​The new UXG will have a market cap of around $1.5B. McEwen will own 25%, and will be taking no salary. It will be flush with $122 million in cash and no debt, and current production of about 42,000 ounces of gold and 3 million ounces of silver. Converting to equivalents for purposes of comparison would give about 113,000 ounces of gold equiv. OR 4.8 million ounces of silver equiv., but not both.

The El Gallo project and the Gold Bar project are in development and should be up and running by late 2014. If McEwen is successful in making that happen on time, then total production should be around 152,000 ounces of gold and 8 million ounces of silver. Converting again for comparison would give us about 340,000 ounces gold equiv. OR 14.4 million ounces silver equiv., but not both.

So let's make some comparisons. As a gold miner, for $1.5B, you get a company about the size of Kirkland Lake Gold ($1.0B) and heading for something the size of New Gold ($3.7B).

As a silver miner, for $1.5B, you get something about the size of Endeavour Silver ($700 million) and heading for something just a tad bigger than Endeavour and First Majestic combined ($2.4B).

So it seems pricey as of today, with the hope of being a pretty good value by the end of 2014. If you own it today (and I do own both UXG and Minera), you are paying what I call the "McEwen Premium". If McEwen does what he says he will do, and gets El Gallo and Gold Bar into production just like he says he will, then it will be worth it.

Oh Cripes! I almost forgot the whole Los Azules copper thing! Currently tied up in a legal dispute, the spin out is on hold. If it ever settles, there's huge value there as well, but hard to quantify right now.

Basically, it all depends on your faith in Rob McEwen. I made good money on Goldcorp back in the day. I have the faith. I'm holding.

Here's the presentation on the merger:

https://www.minandes.com/Presentations/default.aspx

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Thu, Jun 23, 2011 - 10:44am
Eric Original
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Claude Resources (CGR) (CRJ in Canada)

Slow and steady wins the race with this one. Market cap around $270 million. Nothing flashy here. Just a solid, boring, nonpromotional bunch of mining professionals. They've been operating their Seabee Mine in Saskatchewan ​since 1991! Current production of around 55,000 oz per year. Some new resources are currently coming online and this should lift it to around 75,000 in a few years. A recent financing put over $50 million in the till, so we should be good on that front for a while.

Two main advanced exploration projects going on, but again, nothing flashy, no huge promises. They've just been quietly going about their business and advancing these projects for years.

The Amisk property is a potential open pit operation in Saskatchewan, but it's really the Madsen property that interests me.

Similar concept to what is going on in the Kirkland Lake and Timmins camps that I discussed above, the Madsen property is in the Red Lake Camp. It contains 4 old mines that produced 2.4 million ounces between 1938 and 1976. It has a 4000 foot shaft, a 500 ton per day mill, and all the permits. They have rehabilitated and dewatered it about two-thirds of the way down and have a drilling platform set up there. Best recent drilling results are from the "8 Zone Trend". They'll drill over 20,000 meters in 2011. Once they find what they want, it should be a relatively cheap and easy task to get this up and running. I've crunched the numbers and I can see a 50,000 oz per year operation there without much trouble. But it won't happen tomorrow. Nothing with Claude Resources ever does.

Here's their presentation and an article for more info:

https://www.clauderesources.com/images/file/Presentations/2010%20Confere...

https://moneymorning.com/2010/12/20/buy-sell-hold-six-reasons-claude-res...

I like this one. It's the sort of miner I can buy and hold and sleep at night no problem.

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Thu, Jun 23, 2011 - 4:06pm
murphy
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mining field

Just another boring day in the mine field. Down 4% in the morning to back even at 4pm. What a world, what a world!

BTW, anyone have any insight into GSS, Golden Star. I am presently under water but think @ 50% off it could be a candidate for a take over.

Thu, Jun 23, 2011 - 5:27pm murphy
Eric Original
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Ahh, Golden Star

I owned that one something like 10-15 years ago. Woke up one morning to news of a cyanide leak at a mine. Yeah, fun times....

Haven't looked at it in a long time though.

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Thu, Jun 23, 2011 - 5:48pm
ewc58
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Eric my man

just saw your heads up on the front page and came on over. You've done a great job getting this thread going. It was a no brainer as so many of us are involved and hold opinions. I like your list a lot, thanks for posting it. As you and I have been collaborating for months here, I see many of the Gold favorites we've discussed. Now we have a dedicated forum to do it on.

I've got plenty of thoughts on your list and many other miners too. I'll be making some .02 deposits from here on.

Here are 3 of my favorite Au miners not present on your list. None are in production or near it. But these are 3 excellent explorers sitting on terrific land packages. All have great management with proven track records. Their massive moves up are still ahead.

- Pelangio Exploration (PGXPF; Ghana)

- PMI Gold (PMVGF; Ghana)

- Golden Predator (GPRXF; Yukon)

Another Yukon gold explorer I own is Northern Tiger (NTGSF). Nice price for them right now. I think they're a big Yukon winner too.

Kaminak: like you I own it. Love these guys. I note its share price has held up better than any other Yukon miner since it got cold last year. I think they're going to make us a lot of money in the next few years..

Don't Tread On Me
Thu, Jun 23, 2011 - 9:34pm
Eric Original
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ewc58

Welcome aboard buddy. Feel free to chime in anytime, and with any info you like. :)

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Thu, Jun 23, 2011 - 9:58pm
ginger
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Hey Eric, After reading your

Hey Eric,

After reading your post/reply to my options/miner question on the main thread it occurred to me that your gold miner thread here might be an excellent resource to garner names for research on options plays!

So.. ..here I am ...hoping to steal from you guys and see what I can learn from what you know.

As you know.........I don't own any of these EXPENSIVE gold miners. ...Ok.. ...sorry.. I couldn't resist...

Thu, Jun 23, 2011 - 10:03pm
ginger
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Hey ewc, I just wanted to say

Hey ewc,

I just wanted to say thank you for your picks. ..I bought some Northern Tiger & some Riverstone Resources early this week because I had a note scribbled in my journal about these reccos from you in the past. Did a little DD on them and I am going to be very happy with these I am anticipating. Thanks!

Fri, Jun 24, 2011 - 12:17am
Eric Original
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Aurizon

What do you guys think of Aurizon Mines, AZK?? The chart is one sad sick looking puppy, but I'm kind of liking the fundos.

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Fri, Jun 24, 2011 - 12:26am
Eric Original
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Great Basin Gold

I've also got Great Basin Gold, GBG, rattling around in my head. Thoughts?

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Fri, Jun 24, 2011 - 12:30am
Eric Original
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Ginger

Ginger,

Did you notice on my miner write-ups I never once talked about price per share? Always just about total market cap. Think in terms of "If I were buying the entire company, would I do it?" If yes, buy whatever little piece you "can afford" and go with it. "/

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Fri, Jun 24, 2011 - 7:02am
ewc58
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'morning Ginger

hope things in NC are all good for you and yours. You're most welcome, I'm glad those 2 fit your needs. I own Riverstone as well as N. Tiger. Don't forget that I love Silverquest too, but this is Eric's Gold miner space

Eric, GBG has been a head-scratcher for me, I don't get what's holding them back. But they've gone nowhere and at this point other options are higher priority. Ditto Aurizon, but I must admit I haven't looked at them hard in a while- - maybe you've seen something?

Don't Tread On Me
Fri, Jun 24, 2011 - 10:21am
Eric Original
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ewc58 re:Aurizon

I hadn't looked at it much lately either due to the poor relative strength of the stock. But at some point you wonder how cheap can it get?

Good old Casa Berardi production will tick a little higher this year to 165,000. Development of the Joanna property is coming along, and they are talking 100,000 ounces per year coming online in late 2013. You can buy all this for less than $900 Million, down from $1.2B a few months ago. At this price, I have to start thinking about it.

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Fri, Jun 24, 2011 - 10:36am
Eric Original
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ewc58 re: Great Basin Gold

Everything is just now getting up and running for GBG in 2011. Hollister in Nevada should be 110,000 oz. Burnstone in South Africa should be 110,000 in 2011, then a steady 220,000 per year for the next 25 years, which is an outstanding mine life.

I'm thinking the big discount for GBG has been concerns about South Africa. People weren't sure if Burnstone would really get up and running. You never know when the electric power will go out. You never know when the workers will go on strike. You never know when the union and/or the government will push for a bigger piece of the pie.

Still, that's an awful lot of production for less than $900 million, which, like Aurizon, is down from $1.2B just recently. So it's another situation of wondering how cheap can it get?

There's another thread on GBG here:

https://www.tfmetalsreport.com/forum/great-basin-gold-gbg/544

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Fri, Jun 24, 2011 - 10:38am
Eric Original
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Richmont Mines (RIC)

Anybody know anything about Richmont?

By year end, with the re-start of the Francoeur Mine, they'll be producing something like 100,000 per year. Market cap is only $218 million. What's not to like?

Seems like a steady, experienced, nonpromotional crew that just goes about their business. Much like my comments about Claude Resources earlier.

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Fri, Jun 24, 2011 - 11:57am
Eric Original
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Buying Miners

repost of a comment I just put out on the front page:

I said weeks ago on the blog that I was disgruntled with the miners and that I planned to gradually exit the space. But the cave-in in prices took that off the table for me. I don't hate them so much that I wanted to just give them away for cheap.

Now, the action in the miners is looking more and more attractive to me as a buying opportunity. I just added Aurizon, Great Basin, and Richmont.

Lord help me, these miners are driving me insane! Really need some therapy or something, but that's what miners will do to you.

Be safe out there.

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Fri, Jun 24, 2011 - 12:30pm ewc58
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I find myself overweight in

I find myself overweight in Yukon plays at the moment and my best performer has been Silverquest. I see them as a gold company just as much as silver. Their price has been very well supported by their interest in the Davidson gold property.

As for Riverstone and Great Basin, I've owned both of them in the past, onlong with African Gold and Pelangio. I think they're all at good entry points now. It seems the Africans have really taken the brunt of the selling lately, what with geopolitical risk and all.

Also exited my Peruvians, Sue and Rio on Humala concerns. I guess thats mostly why I'm overweight Yukon, just playing it safe in Canada. Also own Gold Canyon and Newstrike in Mexico.

Fri, Jun 24, 2011 - 3:04pm
crackor
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Hey there Eric......I have

Hey there Eric......I have owned and made a few bucks on LSG but they have so many shares out I believe that's what has been holding them back. It has been suggested they are a 5 dollar stock for some years now. I sold and moved on.

I've made really good money trading both ANV and GAM in their respective trading ranges. Like both of them a lot and since they produce and are sitting on good reserves this I believe will serve well going into the fall cycle.

Fri, Jun 24, 2011 - 3:09pm
Eric Original
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crackor

Thanks for your input on Lake Shore. In theory, number of shares shouldn't matter, but yes in the real world it sometimes does. Makes it hard to raise money when needed because the new money doesn't feel like they are getting much of a share of the company I guess. Hopefully, with production kicking in now, cash flows will take care of funding needs, but who knows? Your concerns are valid.

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Fri, Jun 24, 2011 - 4:00pm
Eric Original
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Bralorne Gold Mines (BPMSF) (BPM in Canada)

I've referred to this one as my "little pet" miner several times on the blog. I have an irrational attachment to this one. Let's get the bad stuff out of the way first, to chase out the weak hands, and then I'll get on explaining my own little gold miner "Fantasy Island".

One guy owns about a third of the company. He takes down most of the financings, but if he ever loses interest then this stock will be in a world of hurt. The same guy has a lot of warrants too, so that might somewhat cap the stock if it ever wants to get rolling.

Being extremely small time, I expect costs per ounce to run pretty high for a while. The veins that they find tend to be pretty narrow. Most of the old workings are flooded. The stock hardly trades at all. No liquidity to speak of. If I keep going I'll talk myself out of this one, so I think I'll just stop right there and get on to the good stuff.

Market cap of about $34 million. About 5 hours north of Vancouver, they've assembled an entire old mining district. The old King, Bralorne, and Pioneer Mines, plus the unexplored gaps in between the old mines. These old mines produced 4 million ounces between 1928 and 1971. They've basically been working at if for 20 years now, but with some good discoveries in the last couple years, and receipt of the last necessary permit this spring, they are now actually mining! ​It's still early, but they poured their first bar on May 27 and a long held dream has now been realized. I've crunched the numbers and they appear to be on track to hit their goals of an annual production rate of 11,000 oz at a mill rate of 100 tons per day. They plan to go to 250 tpd by 2013, and they have permits for 500 tpd. They decided a while back not to dewater the old workings right away, but instead to focus on the gaps and the near surface stuff and later to dewater as cash flows allow.

One thing that really caught my interest is Dr. Matt Ball. Here's his bio from the company:

"Bralorne Gold Mines Ltd. (the "Company") is pleased to announce that Dr. Matt Ball, Ph.D., P.Geo. has joined the Board of Directors and has been appointed as, Director and Chief Operating Officer. Dr. Ball is a member of the Association of Professional Engineers and Geoscientists of British Columbia, Canada, the Society of Economic Geologists, USA and has 30 years international experience in exploration and operations geology. He was a semi‐finalist winner of the "Goldcorp Challenge" and subsequently employed by Goldcorp and the overall winner, Geoinfomatics Explorations Inc.

Dr. Ball joins the Bralorne Management team to strengthen the exploration effort to bring this property back into production. He believes the mine property is still largely under‐explored in terms of modern exploration, and that there is potential to do what happened at Goldcorp ‐ where renewed exploration in the historic mine resulted in a significant discovery."

Since the whole idea here is to replicate the same theory that I was talking about earlier, namely bringing great old Canadian underground mines back to life, then Dr. Ball with his experience at Goldcorp seems like the guy to do it. Back in 2009, Bralorne hired Dr. Ball, as an independent consultant, to do some resource calcs. Apparently he liked what he saw so much that he decided to join the company. This is a huge plus to me. As long as Dr. Ball is around, so am I.

Beyond that, it's all just my own irrational romantic notions. If I were a rich dude and wanted to buy an entire mine, this would be it. I'd be camped out right on the property and getting in everybody's way. I'd be like the gold mining version of Mark Cuban and his Dallas Mavericks. Check out the picture on page 6 of the presentation. I'd have my camper parked right there. I'd be sitting in a camp chair, cold one in hand, listening to bubbling Cadwallader Creek and the wind whispering through the pines. And counting my gold. :D

I Bralorne Gold!

Here's the corporate presentation and some other stuff.

https://www.bralorne.com/i/pdf/Presentation2010.pdf

https://www.lillooetnews.net/article/20110601/LILLOOET0101/306019986/-1/...

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