Junior Golds Rebounding Strongly Towards Historic Valuations - RBC

It is hard to believe that just seven months ago, the junior gold sector appeared to be completely dead. But times have thankfully changed. Analyst Michael Curran of RBC Capital Markets demonstrated that the sector is rebounding strongly towards its historic valuations.

Mr. Curran tracks non-producing golds through a unique measure called "adjusted market capitalization per total resource ounce" (AMC/oz). Historically, he wrote that the group average has been in a range of $50 to $75 an ounce. But when the market bottomed out last November, it fell to a woeful low of just $12 an ounce.

The recent numbers are much more encouraging. In March, the average moved up to $23 an ounce. And in his update Thursday, he wrote that it has increased again to $33 an ounce.

To find the best junior gold investment opportunities, Mr. Curran seeks out companies that have strong takeover potential, and/or could be re-rated by the market. To help identify the best plays, he ranked them using a "3-Factor Model" that includes grade, size of deposit, and geopolitical risk.

Great Basin Gold Ltd. (GBG) had the best score using that model. His top picks in the sector also generally scored well. They include Anatolia Minerals Development Ltd. (ALIAF.PK), Detour Gold Corp. (DRGDF.PK), Osisko Mining Corp. (OSKFF.PK), Allied Nevada Gold Corp. (ANV), European Goldfields Ltd. (EGFDF.PK), and Central Rand Gold Ltd.

Comments

[DONE_SONZ:]

I have been buying the juniors with high resource properties.GBG is one.

Jun 26 11:10 AM

[GMiki1:]

A takeover is no assurance. One of my juniors is being acquired, but the price isn't wonderful. Go figure.

Jun 26 11:41 AM

[The Recusant:]

Buy the juniors and hope that they DON'T get taken over. They leverage up faster when they have a bonanza strike as opposed to being a smaller part of a larger company. Riskier but also more profitable.

Jun 26 12:45 PM

[Peter Cooper:]

Yes a great opportunity if you have not already been wiped out - which is always a bit off-putting. But then ten-baggers are always a tough nut to crack and it will be no different this time.

Jun 27 08:09 AM

[rick flair:]

One thing you should be SERIOUSLY aware of with these 'objective' haha Canadian stock reports by BANK ANALYSTS, is that MANY of these co's are financed and MM'd by the very retail brokerage/bank writing the report. think about that as your getting gerbilled repeatedly by TD and RBC etc...trying to trade a stock....just sayin.......

Analyst=Brokerage=Bank...

would you believe a word of what that person said? would you believe they could possibly be unbiased?

Jun 27 03:29 PM

[investicles:]

Yes the past several months were very trying for investors in the resources sector, particullarily the junior explorers with resources. In the past several weeks there seems to certainly be renewed interest and nice to see gold in ground evaluations nearing the $50oz again. One we might want to be aware of is BTR.V (Bonterra Resources) which has announced its plans to aquire 650,000 oz from SEA.T and with prior exploration ( some $40M ) Bonterra is confident along with their adjencent property, bring the resource to 3,000,000 oz. excluding the current 9M oz Silver resource. Interesting times! opportunity abounds
Good Read www.miningmarketwatch....

Jun 27 06:14 PM

[Clint007:]

I have Great Basin Gold since two years and it is performing very poorly since and they are producing! Why?
I also have Rubicon Mineral but this is a lot better winner for me and it is not yet producing. I bought it May 5, 2009 at $2.05, now June 28, is $3.63
For GBG, the 5th of May $1.50, now: $1.64
!!!!!!!!!!!

Jun 28 01:14 AM

[The Recusant:]

CLINT007--
Not to worry about RBY, it's day will come. The bonanza strike that they have going at Red Lake has the potential for some great upside if the remainder of the exploratory drill sites support its size this year. The one fear that I have is that Goldcorp may buy it out. See: www.pressreleasepoint....

Jun 30 10:30 PM