Wow! What a total bloodbath this morning… It looks like the Fed rate hike wasn’t priced into gold mining stocks, after all… 😉
It should be interesting to see how much more downside we have remaining this year, particularly with tax-loss harvesting ramping up.
Surprisingly, I’m noticing that many stocks (small-cap Canadian ones) are holding up well, despite today’s sell-off… For the most part, it’s the most liquid stocks trading on the NYSE (institutionally heavy) that are experiencing the most pain.
In any case, I used today as an opportunity to add some more shares; I picked up 2,500 shares of Richmont Mines (RIC) for $2.84/share.
More details to follow soon, as I’m in the process of writing up a much longer article…
For anyone interested, here are the deals that I’m digging today:
- Pretium Resources (PVG) @ $4.90/share
- Newmarket Gold (NMI.TO) @ C$1.28/share
- Klondex Mines (KLDX) @ $1.93/share
- IAMGOLD (IAG) @ $1.33/share
Please note: The following are just my own thoughts and ramblings… Please don’t misconstrue any of what I have to say as actual investment advice! Speculate at your own risk!
PVG below $5.00/share is a great buy, but somewhat more risky than the other picks above. Pretium’s main project, Brucejack, should be in production sometime in late 2017. Although it’s arguably one of the best undeveloped gold deposits out there (depending on who you ask), anytime there are questions regarding the orebody and “continuity of grade”, there will remain question marks until the cash register rings… repeatedly. My own cost basis is about $6.34/share… If my funds were unlimited (and I didn’t already own 3,000 shares), I would of course dollar cost average (DCA) down today, for sure!
NMI.TO just looks like an absolute STEAL at these levels… This is one of my favorite mid-tier producers, and one that I think will do particularly well in 2016.
If you look at the other Australian mid-tiers such as Northern Star Resources (NST.AX), OceanaGold (OGC.AX), Evolution Mining (EVN.AX), etc., they have all done exceptionally well this year… My bet is that NMI.TO will follow suit in 2016 and join its brethren…
KLDX is another one of my favorite mid-tier ideas. They meet all my criteria: safe jurisdiction (Nevada), great deposits (particularly Fire Creek), low cash costs ($621/oz per gold-equivalent-oz; Q3 earnings), ample cash in the bank (before today’s acquisition, anyway), minimal debt, great management team. Below $2.00/share is a bargain. This is one company that I am most confident can survive a prolonged period of low gold prices…
I’m not a huge fan of IAG, but I especially like it at these levels… If it gets back up to $2.00/share, that’s about a 50% gain… I wouldn’t peg IAG as a “best idea” at all, but I do like it as a short-term trade vehicle.
Regarding my own purchase today, RIC, it’s got a lot of the same qualities as KLDX… In addition to those plusses, RIC has a very tight share structure, which is great if you’re a speculator concerned with excessive share dilution.. There are only about 58 million shares outstanding! They’ve also got some great exploration upside, as they are working on expanding on their Island Gold Mine, working at depth, to generate an additional 78,000 oz. per year beginning in 2017. All-In-Sustaining-Costs (AISC) reside on the higher end of the spectrum (relative to peers), at $968/oz (most recent Q3 results), which is a drawback, but they have a strong balance sheet (C$76.5 million in cash and only C$6 million in debt) which hopefully can help them withstand any potential shocks…
I don’t know about you, but I relish sell-offs such as today! It always feels good to be able to add to, or start new positions at a more favorable cost basis…
And perhaps my favorite gift of all (the one that keeps on giving):