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| Saturday, 1 January 2011, 03:52 HKT/SGT | |
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Vancouver, BC, Jan 1, 2011 - (ACN Newswire) - Consolidation is a continuous process in the mining industry - more so as senior producers elect to explore less and less, letting the speculators absorb the exploration risk in the junior gold sector. Replacing ounces is expensive for a senior producer, making it more prudent to buy an asset that's ready to go into production, rather than incur a liability with residual risk that isn't going to add anything to the bottom line for several years.
Thus the trend is for an exploration project to be almost at feasibility before the senior takes the plunge and goes all in. This means there are some big deposits around that are nearly maxed out in terms of discovery value, and the only option left in their life is a takeover or production.
The process taken by management, to negotiate the maximum price for their shareholders, is countered by the cagey senior acquirers, seeking to get the additional ounces as cheaply as possible. Thus there is many a Mexican stand-off underway, with the senior signaling that it doesn't really need deposits it is interested in right now, and advanced deposit holders posturing to go into production without the major. So you end up with companies going through the motions of putting a deposit into production when really, their preferred exit would be to hand it over to a senior.
Trying to figure out which way a deposit is going to go and when can cause migraines. Far better to take a position in an advanced explorer (for the reduced risk portion of your portfolio) and forget about it. The deal will happen when it happens, and in the case of precious metals deposits, the investment will continue to appreciate in value in relative lock step to the increasing prices of gold and silver.
Chicken Littles who running around screaming that gold is a bubble are correct, but irrelevant, as the popping of this bubble will not occur until currency and capital supply is brought to heel, which likely won't happen until the next major leg down of the now collapsing U.S. dollar bubble. The collapsing of this bubble is difficult to perceive, unlike say, the tech bubble. That's because Bamboozle Ben Bernanke keeps fabricating more dollars out of thin air. But it is collapsing none the less, and so perhaps in three or four more years, the G7 leadership will finally admit that the jig is up, the paper is worthless, and agree to a new global currency whose value is officially determined in part by the price of gold.
So for the foreseeable future, gold and to a greater extent silver will continue to rise in price.
Now the question is, which of the advanced mining projects out there are likely to be sought out by the likes of Barrick, Goldcorp, and Newmont? Here are our annual end-of-year top ten gold companies likely to be taken out by a major.
1. Exeter Resource Corp. (TSX:XRC)
Exeter's Caspiche project in the Maracunga region of northern Chile hosts 26 million ounces of gold and over 6 billion pounds of copper in a low grade deposit sandwiched between large mines operated by Kinross, Barrick and Goldcorp. A deposit of that size is definitely going to end up in the hands of a major producer at some point, despite Exeter's plans to start mining it soon. It's just too big for the majors NOT to buy. Exeter, now trading over $6 a share, was first introduced to Midas Letter Premium Edition subscribers at $3.20 a share on April 14, 2009.
2. Canaco Resources Inc. (TSX.V:CAN)
Powered by its success in the Handeni Gold District in eastern Tanzania, Canaco was the best investment for Midas Letter Premium Edition ("Midas") subscribers, who were lucky enough to first learn about Canaco in the November 9, 2009 edition when the stock was trading at just $0.39. Since then, on major drilling success, the stock has taken off and is now trading in the $5.50 - $6.00 range for a gain of 1,370 per cent. It is expected a resource calculation in 2011 will result in takeover offers. With 32 million shares held by SinoTex Mineral Exploration Company, a major Chinese mining company, any takeover or joint venture development will need to include them in the discussion.
3. Evolving Gold Corp. (TSX:EVG)
Despite ongoing drilling success at the company's 100% owned Rattlesnake Hills project in Wyoming, Evolving Gold's share price continues to underperform expectations. Trading at just over $1 a share, this company remains remarkably cheap for risk tolerant investors, as well as for major mining companies who are surely marking the ongoing progress of this stellar deposit. Recently announced grades of 251 metres of1.5 grams per tonne gold and 332 metres of 1.28 grams per tonne gold, substantiate the April 29, 2009 buy recommendation first given to Midas subscribers, when the shares traded at $0.37.
4. Continental Gold Ltd. (TSX:CNL)
As the first financial publication to feature the opportunity inherent in Continental Gold Ltd., Midas selected the company for investment in April of this year when it debuted on the TSX Exchange at $2.37 a share. Since then, it has traded as high as $10.78 a share, delivering a 273 % win to anyone who initially purchased the shares.
Continental's flagship Buritic project has consistently delivered high grade intercepts that have been the cause of the company's continuous value appreciation. Super bonanza grade intercepts such as 14.3 metres grading 446 grams per tonne of gold (that's nearly 14 ounces per tonne of gold!) and 17.9 metres grading 113.82 grams per tonne gold are going to have majors circling this rapidly evolving story. in droves.
5. Colossus Minerals Inc. (TSX:CSI)
Colossus Minerals, first brought to the attention of Midas subscribers in April 2008 and then again in January 2009 with shares trading at $1.10 per share, has seen its share price reach as high as $9.87 in the last year as continuing development at the incredibly rich Serra Pelada project in Brazil progresses. Some of the richest drill intercepts in the history of mining have been encountered at the Serra Pelada pit, including assays such as 43 metres grading an unbelievable 4,709 grams per tonne gold, 204 grams per tonne platinum, and 1,117 grams per tonne palladium over 43 meters.
The company has managed to avoid too much attention from the majors thus far by electing not to develop 43-101 compliant resources and reserves and instead moving straight into development and production mode. It is likely that there will be a keen desire to own Serra Pelada by major mining companies the closer to production the mine advances.
6. Nova Gold Resources Inc. (TSX: NG)
NovaGold has assembled a world-class portfolio of projects, with 50% interests in two of the world's largest undeveloped gold and copper-gold projects, 100% of the Rock Creek gold project, 100% of the Ambler copper-zinc-gold-silver deposit and other exploration-stage properties. The company is primarily focused on gold properties, some of which also have significant copper, silver and zinc resources.
7. Chesapeake Gold Corp. (TSZ.V: CKG)
Another early opportunity for Midas subscribers, Chesapeake Gold, has grown in value from $3.30 per share, when the Midas Letter first wrote-up on the company in January 2009, to its current price level of $11.20 per share in just 2 short years, delivering a 269 per cent win to investors who bought it below $3.30.
Chesapeake's flagship project is the Metates gold project in Durango state, Mexico. It boasts a National Instrument 43-101 compliant measured and indicated resource of 17.2 million ounces of gold, 467 million ounces of silver and 3.4 billion pounds of zinc, plus a pretty substantial inferred resource as well. This is another evolving story whose sheer contained metal value means it's too big not to be owned by major mining companies.
8. International Tower Hill Mines Ltd. (TSX:ITH)
Another remarkable TSX junior success story, ITH controls 100% of its flagship Livengood gold project 100 kilometres north of Fairbanks, Alaska. (10.9 million ounces Indicated) and 94 Mt at an average grade of 0.79 g/t gold (2.4 million ounces Inferred), both at a 0.5 g/t gold cut-off grade, make it one of the largest new gold discoveries in North America.
Midas subscribers were advised about ITH back in February of 2009 with shares trading at $2.75. Livengood itself is yet another example of a "Too Big Not to Own" gold deposit for the major mining companies.
9. Nevsun Resources Ltd. (TSX: NSU, AMEX:NSU)
Though much smaller in comparison to some of the previously mentioned mega-projects, Nevsun is already in production and has a lot of built-in exploration upside. The current resource of 1.06 million ounces of gold, 9.4 million ounces of silver, and 734 million pounds of copper (not to mention the million plus pounds of zinc) means the Bisha Mine in Eritrea, Africa, will be a profitable little operation, and might therefore be of interest to regional mid-tier mining companies, or majors in the area who perceive an opportunity in the exploration blue-sky.
Midas subscribers were first told about Nevsun in October of 2009 with the shares trading at $2.43 a share.
10. Ventana Gold Corp. (TSX:VEN)
Ventana Gold is the subject of a takeout offer by a subsidiary controlled by Brazilian billionaire Eike Batista that values the company at $12.63 per common share, a price the board of Ventana has roundly rejected as too low as it recommended its shareholders not tender their shares to the offer. Ventana has the 4,590 hectares of exploration property in the historic California-Vetas mining district of Colombia, 400 kilometres northeast of Bogota.
Midas subscribers were initially advised of Ventana when the company was trading at $1.42 per share in April 2009. Since then, the share price has touched as high as $14.13 a share.
2011 Shaping up for Gold and Silver Company Investors
Midas Letter editor and publisher, James West, thinks that the bull market for junior gold and silver explorers and miners is just getting up a head of steam.
"We fully expect the demand for junior miners and their deposits to continue and increase in the coming year," he said. "Senior miners simply can't afford to explore any more and remain competitive, and so that function is now most thoroughly outsourced to junior mining companies. The Midas Letter has proven the most authoritative source of resource company intelligence as demonstrated by our performance during the last year - a year we hope to emulate in 2011, if not improve on."
To view James West's recent BNN video interview on the potential copper bubble, please follow this link. If this link is unavailable, please visit www.investmentpitch.com and enter "midas letter" in the search bar.
CONTACT:
InvestmentPitch.com
Barry Morgan, CFO
+1-604-684-5524
bmorgan@investmentpitch.com
Topic: Press release summary
https://www.acnnewswire.com
From the Asia Corporate News Network
Copyright © 2025 ACN Newswire. All rights reserved. A division of Asia Corporate News Network.
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