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

Auguries By The Throat


December 14, 2012

Truth or desperation? At the Wall Street Journal December 7, Brett Arends contends, “Want to buy some cheap gold? Consider goldmining stocks.” He explains, “Shares of the leading precious-metals companies have lagged behind the price of physical gold bullion so steeply in recent years that they now trade for significantly less than the value of the companies’ gold reserves, say analysts. In fact, the gap is among the widest ever seen, analysts say.”

And now to cases. From the same source December 11, Gillian Tan gives some context to Arends’ optimism, as she suggests that Alacer Gold T.ASR could be a steal at $1.93 billion. Mitch Ryan of Macquarie lays out the case: “An acquirer can pay a reasonable premium to recent share prices, assume zero value for Australian assets and still be in the black for the prize Turkish assets.”

On December 12, Canaccord increased its price target for Argonaut Gold T.AR from $15.50 to $16 (currently $9.65), citing “further growth from a ‘right-sized’ Magino” and “a proven management team at the helm.” On December 11, it set SilverCrest Mines V.SVL at $2.57 (currently $2.48), citing “expect[ed] production of 3.3 million silver equivalent ounces in 2013, ramping up to 4.5 million ounces of silver equivalent per year by 2014.” And on December 10, it lowered First Quantum Minerals T.FM from $21 to $19 (currently $20.80), citing disappointing “December 4 updated Kansanshi mineral resources and reserves estimates and…maiden Enterprise resources and reserves estimates.”

The Jags Report reported December 13 that Jennings Capital has set a price target for Probe Mines V.PRB of US$3.75 (currently C$2.04), that Mackie has cut Chieftain Metals T.CFB from $8.50 to $7, and National Bank has cut it from $8 to $7.25 (currently $2.60); Scotia Capital has raised Centerra Gold T.CG from $20 to $21 (currently $8.09), and BMO Capital has set First Quantum T.FM at $23 (again, currently $20.80), December 12 that CIBC has raised Silver Standard Resources T.SSO from $18 to $23 (currently $14.66); that RBC Capital has lowered Detour Gold T.DGC from $35 to $32, and TD Securities has lowered it from $40 to $39 (currently $24.11), December 10 that TD has raised Lundin Mining T.LUN from $5.50 to $6; CSFB has cut it from $6.25 to $6; Raymond James has cut it from $5.75 to $5.50; and Scotia Capital has cut it from $7 to $6.25 (currently $5.04); that Jennings Capital has set Keegan Resources T.KGN at $5.75, and RBC has raised it from $4.40 to $5 (currently $3.95) and that Scotia Capital has raised its price target for Argonaut Gold T.AR from $13 to $15 (again, currently $9.65).

SmallCapPower reported December 12 that Kurt Hallead of RBC has initiated coverage of Timmins Gold T.TMM with a price target of $4.50 (currently $3.05) and that Michael Siperco of Macquarie has set Osisko T.OSK at $8.25 (currently $7.28), December 10 that Jeff Wright of Global Hunter has initiated Santacruz Silver V.SCZ at $3 (currently $2.25) and December 7 that Alex Terentiew of Raymond James has set HudBay Minerals T.HBM at $11.75 (currently $10.36).

At Happy Capitalism December 12, Lou Schizas looks askance at San Gold T.SGR, which for two years has suffered “a long grinding series of lower highs and lower lows.” Its “death cross” is still in place; and volume is anemic. Conclusion: “What that tells me is that investors do not want to own this stock.” On December 10, Schizas comes to a rosier conclusion about Silver Wheaton T.SLW: “Currently the momentum indicators appear to be turning higher suggesting a trade is setting up which could test resistance at $38” (currently $36.27).

At Seeking Alpha December 10, Cris Frangold asserts, “Companies that are active in British Columbia are likely to see immense growth in revenue and profits in the coming years.” Among the companies he cites as possible beneficiaries are Teck T.TCK.B, which “plans to spend $685 million at two of its metal operations in BC,” Chieftain Metals T.CFB, “whose Tulsequah Resources…known for its zinc, copper, lead, gold and silver deposits is entering into a collaboration with China CAMC Engineering [which] will now hold 30% of stake at the facility in northwestern BC,” Imperial Metals T.III, which has “expanded its Mount Polley open-pit copper-gold mine in 2012 and developed its Red Chris copper-gold facility” and Thompson Creek T.TCM, which has “closed a $350-million financing.”

From the same source December 10, Derek Blain is sweet on Dynacor Gold T.DNG: “This small junior explorer has a one-of-a-kind business model that provides excellent value for shareholders.” To wit, because of its relationship with artisanal miners in Peru, its “pricing model for ore refining is linked to ore grades and metals prices; essentially, it is insured against even up to a 50% drop in the price of gold…while increasing margin as gold prices increase.”

And at the Financial Post December 10, Jonathan Ratner reports that miners in Ghana may face a windfall tax following the re-election of President John Dramani Mahama. According to Nana Sangmuah of Clarus Securities, TSX-listed producers with “full exposure” thereby are Golden Star T.GSC and Perseus Mining T.PRU; producers with “partial exposure” are Newmont T.NMC and Kinross T.K; and “developers with exposure” are Keegan T.KGN, PMI Gold T.PMV and Azumah Resources T.AZR.

Finally, at National Review December 8, Mark Steyn laments the grandeur of the Obama White House, where even the presidential dogwalker earns over $100,000 a year. This is churlish, even for Steyn. For if Obama is truly, as Jamie Foxx attests, “Our Lord and Saviour,” then the Anointed One must be surrounded with a Court that reflects His Splendour and Dignity. What did the poet say? “Look on my Works, ye Mighty, and despair!” Just so.

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