We are currently finalizing our roundup of the Mining Top 25 for 2011, which will be sent out later this week. The Mining Top 20 for 2012 should be released by the end of this month.
Goldgroup Mining (GGA.TO) released an updated resource estimate on the San José de Gracia-project containing 1.1M ounces, roughly in line with our expectations. We now expect Goldgroup to consolidate the ownership of the San José project, by acquiring DynaMexico’s 50% interest in the project. At the current price of C$1.16 they appear to be quite cheap, if they are indeed able to start commercial production at Caballo Blanco by the end of next year.
We attended a presentation of Paramount Gold and Silver (PZG.TO, PZG) last week, and are quite positive on their future. We expect their current 4.8Moz Au and 118Moz Ag to grow to 7Moz Au and 150Moz Ag by the end of next year, which could trigger some interest from senior producers.
On the negative side, their cash position is quite low with only $10M in the treasury, so we anticipate a capital raising somewhere in 2012.
Timmins Gold (TMM.TO) might be quite interesting down here at C$1.90. They outlined a new production plan and expect to produce in excess of 120,000 ounces of gold in 2012. They also stopped their drill program, which should save approximately $30M per year, adding about C$0.15-0.20 in cashflow per share.
For those who continue to believe in higher gold prices and would like to add a senior producer to their portfolio, we’d recommend AuRico Gold (AUQ, AUQ.TO). An interesting strategy might be to write P8’s for January at their US-listing, and receive a premium of 50 cents.
Tax loss selling season only ends at December 23rd, but we are keeping an eye on some companies to buy them on the dip. Belo Sun Mining (BSX.V) at C$0.99, Gold Bullion Development (GBB.V) at C$0.145, CuOro Resources (CUA.V) at C$1.06, Sacre-Coeur Minerals (SCM.V) at C$0.165 and Cline Mining (CMK.TO) at C$1.40 are on our wishlist.