Stellar performance of $45bn gold supergroup

These 100 selected gold stocks have risen by an average of 468% since late in 2008; the top runner has climbed more than 10,000%.

JOHANNESBURG - 

Most of the world's bigger gold stocks look like serious plodders compared to some of the spectacular stock price increases put in by smaller gold stocks, not least Ventana Gold, which has risen by more than 10,000%. A selection of the 100 "hottest" performing listed gold stocks around the world indicates a rise of 468%, on a value-weighted basis, from stock price lows, typically seen during the closing months of 2008.

The 100 stocks, which carry an aggregate value of $45.12bn, contain a good number of names that can hardly be rated as "penny stocks". Seen as a grouping, these 100 stocks boast the highest return over the past while, among any known global subgrouping. A far broader measure of gold stocks, with an aggregate value of $292bn, have "bounced" from lows by a more modest 171%, measured on a weighted average basis.

The latter number outpaces somewhat the value-weighted 142% bounce recorded by the world's 100 most valuable miners. The broader logic from the numbers confirms that bigger gold names weigh down the average; the 14 Tier 1 gold diggers have recorded an average bounce of 145% from lows, with Barrick, the biggest by value and production, lagging with 106%. 

Looking at the "hottest" list, an immediate word of caution is that speculators (and perhaps the odd investor) which dabble in and around this subsector confirm an eternal fickleness, where loyalty is forever yesterday's jaded drumstick. Take Novagold, which owns world class deposits, including Alaska's Donlin Creek, a 50:50 joint venture with Barrick. While a decision to build this mine remains pending, the venture's current 29.3m ounce reserve base indicates a life, according to a feasibility study, of at least 20 years, with gold production for the first 12 full years averaging nearly 1.5m ounces a year, a number achieved by few gold mines anywhere.

Novagold's stock price fell to half a Canadian dollar late in 2008, 95% below its earlier high of CAD 10.00 a share, and more than that from levels of CAD 20.00 a share seen in both 2006 and 2007. While the stock price recently made CAD 6.00 a share, a 12 times multiple from recent lows, the price has now moved below CAD 5.00 a share. A number of top performing gold stocks that fall into the Novagold type category - through each has its own story -include Frontier Mining, New Dawn, Colombia Goldfields, Azteca Gold, Mano River, Appleton Exploration, Trilliant, Yukon-Nevada Gold, High River, Oroco Resource, PanAust, Luiri Gold, Elray Resources, Reunion Gold and  Midway Gold.

These stocks are not for widows and orphans. There has even been some recent net selling of Ventana Gold, which this year has published a series of high grade drill intercepts from the La Mascota mineralized zone on its flagship La Bodega gold property in Colombia. At least one analyst has mentioned a price target of C$10.00 a share for Ventana, not least on the back of a projection of 550,000 ounces of gold production a year at total cash costs of just $295 an ounce.

This could turn out to be another proverbial ship in the night; Greystar, which has long proven up a resource of more than 10m ounces of gold, and more than 60m ounces of silver, at Angostura, also in Colombia, is languishing 44% below its stock price highs. Greystar carries a market value of $172m, considerably less than the $375m carried by Ventana.

Either Greystar is undervalued, or Ventana is overvalued, but not both. Ventana's market value is close to half the number alongside Novagold's name. The roving bubble-herd mentality, and sometimes what seems like temporary insanity, sometimes grips junior gold stocks and was seen classically this week, when Ventana announced that it had "not sold any common shares" in Ventana to 63X Master Fund, of Grand Cayman; 63X had earlier announced that it had bought just over 10% of the issued shares in Ventana from Ventana itself. Press pause and replay?

Top notch drilling results remain, as always, a consistent theme among the pecking order of "hottest" gold stocks; in Australia, Sandfire Resources has seen a gain of nearly 4,000% in its stock price on the back of drill results at DeGrussa prospect, part of the 100%-held Doolgunna project. DeGrussa may be primarily copper, but it has associated gold, silver, zinc and palladium. In Canada, Queenston Mining has also moved substantially on drill results, including recent news from its 100% owned Upper Beaver property in Kirkland Lake, Ontario. Shield Mining, busy in Mauritania, also fits into the great drill results category.

Another strong theme has continued to emerge with the rise of gold stocks active in Africa, after last month's bid by Red Back for Moto Goldmines was last week countered by a joint bid of nearly $500m from Randgold Resources and AngloGold Ashanti. African and Africa-related names that have put in sterling performances this year include La Mancha Resources, Pelangio, PMI Gold, Avion Resources, Shield Mining, Ampella Mining, Sunridge Gold, Keegan Resources, Cluff Gold, Gryphon Minerals, Nevsun, Helio Resource, African Queen, Adamus Resources, and Golden Star.

Names involved in potential or actual corporate activity tend to rank among top performers; beyond Moto, the likes of Klondex Mines and Paramount Gold can be mentioned; likewise, potential favourite takeover targets that have risen to the top include Seabridge, San Gold, Allied Nevada, Lake Shore Gold, Osisko, Medusa, US Gold Corp., West Timmins, and Norseman Gold, not to forget evergreen favourite Andean.

A more recent trend, supported by broad Chinese stock market indices such as the CSI 300 and Shanghai Composite riding at 12-month highs, has seen Chinese miners turning in excellent performances, in the gold arena, in the shape of the likes of Shandong Gold, Zhongjin, Zhaojin, and Canada-listed Mundoro. There have also been some stellar recoveries in prices for stocks operating in the Russian region, as seen in the case of JSC Polymetal, and Peter Hambro, and also in the Asian region, as seen in the cases of Centerra and East Asia Minerals.

SUBSCRIBE to Mineweb.com's free daily newsletter now.

Disclaimer

MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning,  and concluding, 24 hours later,  in the Vancouver evening.  If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com

Print story      Email story      Subscribe to free newsletter

Back

 

responses to this article

Barry - please provide investment merits of a few good prospects The information is very interesting but wil be much more helpful if the investment merits of a few stand-out prospects are presented. Say key fundamentals (drivers) and risk levels? Or, indicate where we can find this information. by Jan on July 22 2009, 14:03 Find this comment inappropriate? Report it

Silk Road Gold Do you know[url=http://www.srgold4u.com]Silk Road Gold[/url]?if you play the online game,you will know[url=http://www.srgold4u.com]Silkroad Gold[/url]is the game gold. In the game, if you had more[url=http://www.srgold4u.com]Sro Gold[/url],you will . .more had a tall level. But if you want[url=http://www.srgold4u.com]Buy SilkRoad Gold[/url],you can come here and spend a little money to bought[url=http://www.srgold4u.com]Buy Sro Gold[/url].Quickly come here. . .less by Silk Road Gold on January 28 2010, 18:45 Find this comment inappropriate? Report it

Name
Subject
Comment