tsx, tsx-v, goldtsx, silver, junior resource

Auguries The Homer Simpson Plan


December 7, 2012

And now to cases. Reuters reported December 3 that National Bank Financial has cut the target price of Copper Mountain Mining T.CUM from $4.70 to $4.40 (currently $3.65), “citing the potential for lower grades and elevated stripping rates into 2013.”

On December 6, Canaccord maintained the price target of Sandstorm Gold V.SSL at $15.25 (currently $11.40), noting that the company has “entered into an agreement with Mutiny Gold [of Australia] to purchase 15% of the gold produced from its Deflector project,” and, on December 3, it maintained Galane Gold V.GG at $1.80 (currently $0.76), arguing, “We consider the stock very inexpensive, based on its attractive free cashflow profile and its strong reserve/resource upside potential.”

“Something appears to have snapped in the American psyche, as the last 30 days have seen the largest physical gold sales on record. Between the search volume for ‘bulk ammo’ and this, we fear something is afoot”—ZeroHedge

SmallCapPower reported December 6 that Michael Gray of Macquarie has initiated coverage of Elgin Mining T.ELG with a price target of $1.50 (currently $0.80), December 5 that Sam Crittenden of RBC has initiated Argonaut Gold T.AR at $14 (currently $9.32), December 4 that Fraser Phillips of RBC has initiated Ivanplats T.IVP at $5.75 (currently $4.84), December 3 that Leon Esterhuizen of CIBC has initiated Dundee Precious Metals T.DPM at $12.50 (currently $8.34) and November 30 that Jeff Wright of Global Hunter has initiated Luna Gold T.LGC at $3.35 (currently $3.19), and Andrew Breichmanas of BMO has set SEMAFO T.SMF at $5 (currently $3.20).

At the Financial Post, Peter Koven reports December 6 that Alex Terentiew of Raymond James has raised the price target of HudBay Minerals T.HBM from $11.50 to $11.75 (currently $9.84) and expects it to “re-emerge as a multimine company…. He calculated that the miner’s EBITDA is set to grow almost eightfold between 2013 and 2016. And on a total net asset value basis, he expects HudBay to be the largest gainer in its peer group between now and the end of next year.”

Raymond James delivered its verdict on the merger of PMI Gold T.PMV and Keegan Resources T.KGN December 6: “Individually Good, Collectively Better.” According to its analysts, the new company, Asanko Gold, “offers investors a chance to own a derisking, advancing developer, with ambitions to be the next midtier gold producer focused in a favourable mining region, Ghana.” It maintained PMI’s target price at $1.40 (currently $0.83).

The JAGS Report reported December 6 that Global Hunter has raised its price target for Silver Standard T.SSO from US$21 to $US$22, based on “its feasibility study on the Pitarrilla project in Mexico [which] had an aftertax NPV of $737 million and a 12.8% IRR with $741 million in initial” CAPEX, while UBS raised its target from US$18.50 to US$20 (currently C$13.45) and December 4 that Scotia Capital has cut its target for Osisko Mining T.OSK from $12.75 to $12; RBC has cut it from $13 to $12; TD Securities has cut it from $13.50 to $11.50; while Dundee Securities has raised its price target from $11 to $14 (currently $7.44).

In a December 3 Gold Report interview, Rick Mills, editor-publisher of Aheadoftheherd.com, has kind words for Altair Gold V.AVX and its Kena Project in BC (“[It] has proven it can raise money. It can run a technical drill program. It can get the word out to investors…. [It] could have something spectacular”), NioGold V.NOX (“With just a little over 100 million shares, that’s a cap of about $32 million. The [resource payment] from [joint-venture partner] Aurizon Mines T.ARZ is already going to be bigger than [that]”), Terraco Gold V.TEN (“Nutmeg Mountain, [its] Almaden project [in Idaho]…. seems to be a perfect example of a low-cost [gold-copper] deposit”) and Northern Vertex V.NEE and its Moss gold-silver project in Arizona (“It’s a smart plan run by some very smart people. I have no doubt that this one is going to be successful”).

And at Seeking Alpha December 3, Christopher Davis points out that silver is down one-third from its high of $49.76 last year. Accordingly, the gold-silver price ratio is now greater than 51:1, “whereas the historical ratio is 16:1… and I believe a reversion is overdue.” For this to occur, gold must fall greatly, or silver must rise greatly. Davis “believe[s] the latter is far more likely than the former, especially in a climate of endless monetary easing.” For those who accept his hypothesis, he suggests the following stocks: Silver Wheaton T.SLW, Central Fund of Canada T.CEF.A, Silvercorp T.SVM, Pan American T.PAA, MAG Silver T.MAG and Great Panther T.GPR.

Finally, as the Mayor Rob Ford saga lurches onward, one is appalled by the senseless tragedy expressed therein. Ford was the whole package: sweaty, angry, self-pitying, morbidly obese, a hair-trigger temper—what could have gone wrong?

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