Ratchet Up Your Enthusiasm For Gold
by Peter Grandich
Given the fact that the great secular gold bull market has gone on for about eight years and has seen a more then a tripling in price, the amount of enthusiasm in and around the metals and mining industry currently doesn’t come close to matching the results. In fact, I believe there was far more exuberance with gold breaking above $400 than there is now at $1,100. How anyone can call gold in a bubble is beyond me.
It’s very fair to say the majority of mining and exploration stocks have underperformed the metals themselves. While not unusual at times, the amount of time this has now been true has led some to question the validity of owning these types of stocks.
Without question, the mining and exploration industry has not quite lived up to the expectations one could have given the rises in most metals prices. A number of factors have played a role in this and are not about to simply disappear overnight. However, there comes a time when you have to judge whether the current prices are fairly discounting most of the negative views. Biases and potential conflicts of interest notwithstanding, I do believe this is one of those times, and the time has come to ratchet up our enthusiasm a couple of notches.
Here’s my list of companies one can get enthusiastic about, taking into account they’re all highly speculative. (Note: “speculation” is a word the financial industry came up with to replace the word gambling. One must truly be prepared financially and mentally to lose part or all one’s capital when speculating/gambling).
Anooraq Resources (ANO-U.S. -ARQ-TSX) - Many times just gold and silver pop into one’s mind when thinking of precious metals. But platinum and palladium are also precious metals and have been in an even stronger bull market. Usually only South African shares come to mind when thinking about PGM stocks. They’ve been ignored by most, mainly because of difficulties both the S.A. Rand pressuring margins and numerous mining challenges.
A wonderful turnaround story unfolding is Anooraq Resources thanks mainly to a new management team that has seen great success already but says the best is yet to come.
Evolving Gold - (EVG-TSX-V) - Most juniors never even get a kick at the can of one world-class property, but EVG has two. A number of reasons including some management decisions not related to actual exploration have caused an unworthy cloud of doubt to presently hang over the share price. This, IMHO, has created a superb speculative opportunity. In the end, the rise and fall of juniors depends on results from the drill bit, and in this case I believe the chances of drilling out two world-class deposits is quite strong.
Taseko Mines (TGB-U.S., TKO-TSX) - Already a significant copper producer, the expectations of bringing a world-class gold-copper deposit called the Prosperity into development makes this company one of the emerging stars in the mining business.
Uranium Turnaround? While most analysts, newsletter writers and such have either suffered “select” amnesia or just hope people forget their once exuberance for triple digit uranium prices, I continue to remind myself that I, too, once felt that was more a question of when, not if. But like in other circumstances, we all learned that we so-called experts put our pants on one leg at a time, too.
It appears uranium has been groping out a major bottom and while not likely to resume flight straight back to triple digits, the light at the end of the tunnel doesn’t appear to be an oncoming train. Nuclear energy seems poised to not only be a significant source of energy for years to come worldwide, but also back in the United States, a feat most thought impossible not to long ago.
With this in mind, it may be for some time to go shopping for more than just survivors in that industry.
Strathmore Minerals (STM-TSX-V) - Strathmore is advancing two core uranium development projects towards production: the Gas Hills in Wyoming and Roca Honda in New Mexico. In 2007, Roca Honda was joint-ventured with Sumitomo Corp of Japan. In 2009, the joint venture submitted its Roca Honda mine permit application, which was deemed “administratively complete” by the regulatory agencies, and is now undergoing technical review. Roca Honda represents the largest proposed uranium mine in the United States in over thirty years.
Ur-Energy (URG-U.S. -URE-TSX) - Ur-Energy is a dynamic junior mining company focusing on exploration and development of uranium properties in the United States, and in Canada Ur-Energy is completing permitting activities to bring its Lost Creek Wyoming uranium deposit into production and build a two-million-pounds-per-year processing facility.
Denison Mines (DNN-U.S. -DML-TSX) - is a diversified, growth-oriented, intermediate uranium producer with three active mines in the United States. Denison’s assets include an interest in two of the four licensed and operating conventional uranium mills in North America, with its 100% ownership of the White Mesa mill in Utah and its 22.5% ownership of the McClean Lake mill in Saskatchewan. Both mills are fully permitted and operating. Denison also has other mines and projects on stand-by in Canada and the U.S.
Denison’s 2009 production from its two mills was 1.4 million pounds U3O8 and 0.5 million pounds of vanadium. Production for 2010 is estimated to be 1.6 million pounds U3O8 and 2.8 million pounds of vanadium.
Peter Grandich is a compensated consultant to Anooraq Resources, Evolving Gold, Strathmore Minerals and Taseko Mines. www.grandich.com
