Another article has been posted on Seeking Alpha titled ‘We’ve Heard It Before, But RBC Thinks Worst Is Over for Junior Golds’ – read here.
The article says analyst Mike Curran of RBC argues that a number of junior gold companies are in a position to get re-rated by the market and/or taken over at a big premium in circumstances where they have almost no chance of raising money now, and that focus ought be on those companies with higher-grade deposits, lower political risk locales, and/or bigger deposits.
Because of my involvement with the StockResearchPortal.com website I talk to junior gold company Presidents most days. What I am being told by a few of them is that capital is now freeing up, although at least one told me he thinks the window may close again soon. My own view, developed from continuously reviewing data on the approximate 650 gold companies whose data is embedded in our website, is that the junior golds were mercilessly beaten down last fall as a result of fund cash calls and overall market malaise. There has been some recovery from the bottoms for the junior golds in the past few weeks – but my sense is that the price range for many of them has closely co-related with the gold price, irrespective of any ‘new news’ they may release. Accordingly, if today’s rise in the gold price (to approximately $920 in the futures market at 7:30 a.m. Eastern time) holds up I would expect a number of Junior Golds to see share price increases today. That said, as an investor and not a ‘trader’ I look for the same things as Curran apparently suggests. In addition to what Curran mentioned I look closely at a host of other things including existing external and internal infrastructure and management. If you invest in junior golds I suggest you carefully read the Post Series on this Blog found under the ‘Valuation of Mining Companies’ blog category here.