I've been asked that more frequently of late. Kind of tells me that smart contrarian money may be nibbling. Here is my answer on Stockhouse. Also add Gabriel (GBU) to that list, as I just snapped some up at 2.42.
stockhouse.com
At first blush you might wonder why I would be going so aggressively for explorers. I am concentrating my focus on the top 20% percentile cost wise of what are mostly advanced staged deposits. There are very few start up projects on my list. And there is no reason to buy 200 plus cash cost profiles and bet on a price recovery. A price recovery is coming, but the names I'm buying will pop up on the radar screen pretty quickly. Valuations are nominal, and the leverage is enormous. SOME WILL NOT WORK, but others will pay off five to tenfold. If you were to go to the sites you will often see my in depth comments. If you wanted to get jump started on this sector, I would suggest subscribing to Claude Cormier's (who many of you know)inexpensive Ormetal publication. He works hard on the sector. L. Roulston's Resource Opportunities is good as well.
You will notice I have few producers. I would only buy FN, IMG (I have posted an update on their hedge book reduction process), RNG, TVX. MDG is about my only trading stock: buy at 5 times cash flow (right now 5 and change), sell at seven times. I had 1 3/8 buys in on GLG, but missed it. The rest of the producers are really a sad lot. I have no interest in high cost names or hedgers (I use the term cappers). I suppose NEM would be acceptable, but on a valuation basis, my picks are much cheaper and I think better companies. I'm only lukewarm towards Goldfields and Harmony and don't own them. Durban Deep is a dog. Goldcorp and AEM are good stories, OK to own, but in my work a bit pricey. FCX is worth a shot at slightly lower prices. One of my greatest concerns about gold bulls, is that they will load up on marginal companies and cappers, and end up scratching their heads after a big rally asking why they didn't have substantial profits. |
