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NEW WORLD, NEW WINNERS

MINING FINANCE / INVESTMENT

As banks eat dirt, miners rule the world

There may be some penny stocks in the world's 100 top-performing mining stocks, but the aggregate value of the grouping is a respectable $43bn.

Author: Barry Sergeant
Posted: Wednesday , 25 Mar 2009

JOHANNESBURG  - 

Measured from low points in stock prices seen over the past 12 months, a selection of 100 of the world's best-performing mining stocks have "bounced" by an average of 342%. The MSCI Barra dollar index for all global equities, as a broad global benchmark has, by comparison, bounced by a much more modest 21%. 

This selection of the world's top performing mining stocks is heavily peppered with gold stocks, supported by gold bullion, which retains its place as the world's best performing commodity, relatively. Strictly speaking, primary silver miners head the mining subsector performance list, but the investible value of primary silver diggers is a relatively modest $13bn, compared to the $226bn offered by primary gold diggers.

The world's top 100 mining stocks, measured by value, currently offer an aggregate investible market value of $938bn, of which 46% is offered by the top ten, led by BHP Billiton, with a current individual market value of $123bn. 

The very best stock price performances have come mainly from a mixture of gold and silver companies. Spectacular performances have been put in by La Mancha Resources, Central Sun Mining, Greystar, Tanami Gold, Golden Odyssey, Novagold, and Zhaojin.

There are normally good reasons for why these stocks have risen by between 500% and 900% from recent stock price lows. 

In some cases top-performing stocks rank as such due to being sold down to "priced to go bust levels", and then somehow finding a way to emerge from the murk. In most cases, however, top performances are linked to meeting production and other targets, delivering on time, and growing production or forwarding development, and keeping costs under control. Smaller stocks offer the most flexibility, or "leverage", in most of these departments. 

Looking at the top ten or so stocks, La Mancha operates three gold mines, with production distributed between Africa and Australia, and is actively developing an advanced project in Australia. Central Sun appears to be the beneficiary of corporate action with B2Gold; Tanami has literally risen from the ashes; so too Golden Odyssey, which has completed a number of financings in recent months. Zhaojin, a Chinese gold miner, reflects not only the good demand for gold stocks, but also the resurgence of Asian mining stocks in general over the past few months. 

Greystar ranks for special mention, on the basis of its positive prefeasibility study for Colombia's Angostura project, released on Wednesday. Using a base case gold price of $700/oz in the first three years of operation and $650/oz after that, the study envisions average annual production of 511,000 ounces of gold and 2.3m ounces of silver over a 15 year mine life. The average cash operating costs for life of mine (LOM), excluding by-product credits, is $391/oz. 

Start-up capital costs are $638m, with additional sustaining capital of $307m, including the construction of a concentrator. The study envisions the start of construction in 2010, with production commencing in 2012. Greystar carries a dirt-cheap market value of $139m, making it highly improbable that the mine can be developed without a major partner. AngloGold Ashanti lies in the clearest line of sight, as a Tier I global gold producer that has also made a world-class gold discovery in Colombia. 

The inclusion of JSC Polymetal among the world's very top performing mining stocks reflects not only the underlying themes of silver (first for Polymetal) and gold, but also the brutal selloff of Russian stocks generally during the latter parts of 2008. The reversal of that sell off has underpinned some spectacular stock price recoveries, seen in the likes of Russian potash miner Uralkali, nearly 300% above its low prices (but also currently 80% off its highs); VorkutauGol, a Russian coal miner, has risen by more than 600% from its low points. Russia's biggest gold name, Polyus, has risen by nearly 400% from its lows. 

Novagold is also a very top performer; following the easing of liquidity concerns, on raising $75m and clarifying its joint financing arrangements at the 50:50 Galore Creek project with Teck, which labours under a $12.05bn mountain of debt. There has probably also been increasing recognition of Novagold's 50:50 partner in the massive Donlin Creek project in Alaska, in the form of Barrick, the world's biggest gold miner by production and value. 

For some months, Fresnillo, the world's biggest primary silver miner, has ranked as the top performing stock in its subsector, but has recently been solidly taken over by Silverstone, which has now bounced up by more than 400% from its lows. Silverstone reported 2008 silver sales of some 1.7m ounces and by its own forecast this should increase to up to 4.6m "silver equivalent ounces" (which include gold by-product credits) in 2009. 

Given more than 1,000 mining stocks listed around the world, there are almost certainly going to be surprise top performers at any given time. While diamonds miners generally rank as the least-wanted mining subsector among listed stocks, Tsodilo Resources, a "penny stock" with interests in Botswana, has put in a spectacular stock price performance. 

Similarly, Mano River, with a market value of $15m, and which seeks gold, diamond and iron ore deposits in the West African Mano River Union countries of Sierra Leone, Liberia and Guinea and the Democratic Republic of Congo. Top performing stocks from lesser favoured subsectors include Peregrine Diamonds, Pan Palladium, and Pangea Diamondfields

Uranium stocks as a class have done well, led by First Uranium. Relative newcomer Niger Uranium disclosed earlier this year that NWT Uranium holds 34% of Niger Uranium, a company formed on 17 July 2007, when UraMin and NWT Uranium vended their Niger uranium properties into Niger Uranium. A month after Niger Uranium was established, Areva, a big uranium miner and integrated energy company, paid $2.5bn for Uramin, where John "Ian" Stalker was CEO. 

UraMin was incorporated in 2005 to acquire and develop mineral properties, predominantly uranium in Namibia, the Central African Republic and South Africa. Some investors, no doubt, are trusting that Niger Uranium CEO Stalker can sniff out another uranium elephant. Niger Uranium recently published encouraging drilling results from its Henkries project in South Africa. 

There are also top performing mining stocks benefiting from corporate action, real or potential or imagined, as seen in Central Sun Mining. Further names include Kalahari Minerals, which holds 39.8% in Namibian uranium play Extract Resources; mining major Rio Tinto has taken a bite of both companies. Aricom, an iron ore name, has also performed strongly on the back of its proposed business combination with Peter Hambro, which currently ranks as Russia's No 2 gold digger, with 2009 production guidance at 460-510,000 ounces of gold, with one of the lowest cash costs gold worldwide, at $215/oz. In the odd proposed combination, Aricom provides "significant iron ore assets on China's doorstep". 

After gold and silver stocks, copper names currently rank as the most popular mining subsector. Here, individual stock price performances have been less impressive than the more general wave of positive price performances. Leading larger copper names include Northern Dynasty, which is 50:50 with Anglo American in the giant Alaskan pebble project. Solid performances in the copper stock space have also come from Pan Australian, Jiangxi Copper, and First Quantum.

In terms of absolute, rather than composite 12-month, stock price performance, there is no question that gold stocks dominate. Current names trading with 10% of 12-month highs include AngloGold Ashanti, Iamgold, Randgold Resources, Eldorado, DRDGold, Int'l Tower Hill, Richmont Mines, Seabridge, Aurizon, Osisko, Semafo, Medusa, and Franco-Nevada, a gold royalty company. 

SELECTED TOP PERFORMING GLOBAL MINING STOCKS

 

 

Stock

From

From

Value

 

price

high*

low*

$bn

La Mancha Resources

CAD 0.41

-28.9%

912.5%

0.047

Central Sun Mining

CAD 0.75

-70.0%

900.0%

0.038

VorkutauGol

$3.00

-62.0%

650.0%

0.028

JSC Polymetal

$7.00

-23.9%

600.0%

2.205

Greystar

CAD 3.71

-38.2%

600.0%

0.139

Tanami Gold

AUD 0.03

-45.0%

560.0%

0.081

Golden Odyssey

CAD 0.13

-10.7%

525.0%

0.004

Novagold

CAD 3.15

-68.5%

563.2%

0.464

First Uranium

CAD 6.15

-23.1%

502.9%

0.854

Zhaojin

HKD 11.18

-22.1%

501.1%

0.631

Azteca Gold

CAD 0.13

-56.9%

525.0%

0.017

Keegan Resources

$2.25

-60.9%

524.5%

0.064

Tsodilo Resources

CAD 0.37

-27.5%

469.2%

0.005

US Gold Corp.

$2.14

-28.4%

463.2%

0.169

Australian Solomons

CAD 0.15

-75.8%

500.0%

0.013

Mano River

CAD 0.06

-85.5%

500.0%

0.015

Regis Resources

AUD 0.33

-17.5%

423.8%

0.055

Silverstone

CAD 1.85

-37.3%

436.2%

0.185

Coral Gold

CAD 0.54

-60.6%

440.0%

0.011

Reunion Gold

CAD 0.14

-80.8%

460.0%

0.006

Queenston Mining

CAD 3.72

-10.4%

389.5%

0.159

Extract Resources

AUD 3.60

-5.0%

380.0%

0.549

PMI Gold

CAD 0.06

-78.8%

450.0%

0.004

Niger Uranium

GBP 0.19

-22.9%

393.3%

0.031

Aricom

GBP 0.28

-73.8%

442.0%

0.479

Dragon Mining

AUD 0.07

-36.4%

400.0%

0.036

Fresnillo

GBP 4.49

-21.9%

382.8%

4.703

Aurizon

CAD 5.60

-4.6%

362.8%

0.673

Claude Resources

$0.60

-45.4%

400.6%

0.058

San Anton Resources

CAD 0.16

-80.2%

433.3%

0.014

Uranium One

CAD 2.97

-42.7%

395.0%

1.131

Dynasty Metals

CAD 5.05

-31.6%

381.0%

0.145

North Atlantic Resources

CAD 0.11

-79.0%

425.0%

0.002

PDX Resources

CAD 2.65

-49.6%

390.7%

0.159

NWM Mining

CAD 0.54

-59.5%

400.0%

0.006

Polyus

$23.98

-31.2%

370.2%

9.142

African Queen

CAD 0.28

-30.0%

366.7%

0.008

Marum Resources

CAD 0.12

-44.2%

380.0%

0.009

Peregrine Diamonds

CAD 0.69

-15.8%

343.7%

0.045

Guyana Goldfields

CAD 2.97

-59.8%

386.9%

0.142

Western Goldfields

CAD 2.30

-33.5%

360.0%

0.253

Pan Palladium

AUD 0.04

-62.1%

387.5%

0.008

Brazauro

CAD 0.47

-47.8%

370.0%

0.032

Golden Goose

CAD 0.34

-64.2%

385.7%

0.013

Centerra

CAD 4.35

-67.8%

383.3%

0.763

Oceanagold

AUD 0.73

-74.8%

386.7%

0.082

Caledon Resource

GBP 0.35

-78.1%

385.9%

0.106

Osisko

CAD 5.67

-1.2%

305.0%

1.173

Catalpa Resources

AUD 0.08

-22.9%

326.3%

0.029

Northern Dynasty

CAD 8.17

-22.9%

325.5%

0.613

Oremex Silver

CAD 0.10

-73.2%

375.0%

0.004

Anatolia

CAD 2.84

-35.5%

336.9%

0.264

East Asia Minerals

CAD 0.56

-69.7%

366.7%

0.018

Medusa

AUD 1.65

-6.0%

302.4%

0.191

Frontier Mining

GBP 0.01

-91.3%

380.0%

0.002

Seabridge

CAD 28.80

-2.5%

284.0%

0.873

Aura Silver

CAD 0.09

-70.0%

350.0%

0.003

Lingbao

HKD 3.20

-20.8%

300.0%

0.123

Mines Management

$2.05

-48.1%

327.1%

0.047

Moto Goldmines

CAD 2.77

-43.9%

319.7%

0.197

Colossus Minerals

CAD 1.83

-54.3%

325.6%

0.081

Iamgold

$8.38

-6.9%

277.5%

2.727

Hinterland Metals

CAD 0.05

-85.0%

350.0%

0.002

Adamus Resources

AUD 0.39

-27.8%

290.0%

0.042

Eldorado

$8.77

-7.9%

268.5%

3.245

Andean

AUD 1.58

-15.8%

270.6%

0.443

Nevsun

CAD 1.36

-38.2%

288.6%

0.142

Moneta Porcupine

CAD 0.10

-54.5%

300.0%

0.008

PC Gold

CAD 0.45

-64.0%

309.1%

0.009

Pangea Diamondfields

GBP 0.02

-96.9%

340.0%

0.003

Silvercrest

CAD 0.74

-46.8%

289.5%

0.027

African Minerals

GBP 0.38

-80.5%

322.2%

0.104

Gammon Gold

CAD 9.50

-15.2%

254.5%

0.941

Geoinformatics

CAD 0.22

-90.9%

330.0%

0.013

Golden Star

$1.57

-59.2%

292.5%

0.300

Mega Uranium

CAD 1.47

-46.0%

276.9%

0.223

Blue Sky Uranium

CAD 0.12

-73.9%

300.0%

0.004

Richmont Mines

CAD 4.00

-4.8%

230.6%

0.085

Kalahari Minerals

GBP 0.85

-5.8%

229.1%

0.221

Exeter Resources

CAD 3.68

-27.4%

250.5%

0.186

Vior

CAD 0.08

-55.9%

275.0%

0.005

US Silver Corp

CAD 0.12

-83.1%

300.0%

0.021

Minco Silver

CAD 1.16

-71.0%

286.7%

0.029

Verena

CAD 0.15

-61.5%

275.0%

0.012

Detour Gold

CAD 10.50

-58.7%

267.1%

0.382

Uralkali

$12.40

-84.7%

292.4%

5.268

Cluff Gold

GBP 0.38

-63.1%

270.7%

0.054

Solex Resources

CAD 0.10

-72.9%

280.0%

0.004

Augusta Resources

$1.50

-78.4%

284.6%

0.133

Bannerman

AUD 0.84

-67.6%

273.3%

0.091

High River Gold

CAD 0.16

-94.6%

300.0%

0.077

Aquiline Resources

CAD 2.72

-72.8%

277.8%

0.150

PMI Gold

CAD 2.72

-72.8%

277.8%

0.150

Black Range Minerals

AUD 0.04

-59.2%

263.6%

0.026

Yukon-Nevada Gold

CAD 0.08

-95.6%

300.0%

0.018

Archipelago

GBP 0.08

-77.1%

281.3%

0.022

Colombia Goldfields

CAD 0.04

-96.0%

300.0%

0.003

S American Silver

CAD 0.35

-46.2%

250.0%

0.014

Imperial Metals

CAD 3.43

-67.3%

268.8%

0.089

DRDGold

R8.80

-7.9%

207.7%

0.347

Overall averages/total

 

-49.7%

372.2%

43.024

Overall weighted averages

-53.9%

341.6%

 

 

Tags: La Mancha Resources, Central Sun Mining, Greystar, Tanami Gold, Golden Odyssey, Novagold, Zhaojin

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10 May 2013


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BONTERRA RES0.010 CAD+100.00%
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ARGONAUT EXP0.02 CAD+50.00%

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ANGLO SWISS0.005 CAD-66.67%
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