Investopedia Advisor submits: Gold has soared in the last year as a safe haven from a weakening dollar, a massive trade and current account, and as a safe haven from geopolitical tensions in Iraq, Iran and North Korea. Gammon Lake Resources (GRS) has executed during the past year on a simple plan: build productive resources. Its shares have doubled to $14. Gammon Lake Resources Inc. is engaged in the acquisition, exploration and development of resource properties in Canada and Mexico.
The Company focuses on the exploration and development of its mineral interests (comprising a total of 44 mining concessions encompassing approximately 3,500 hectares) in the municipality of Ocampo, in the State of Chihuahua, Mexico - collectively, the Ocampo Project.
During 2005 and 2006, GRS has been developing massive discoveries in our neighbor to the south, Mexico.
With a market cap of $1.2B and 65% institutional ownership, GRS has sponsorship and investment ownership by Goldman Sachs and UBS Securities, while its other three largest institutional owners, Franklin Advisers, Capital Research and Tocqueville Asset Management, have all been accumulating shares over the past six months.
GRS has nearly doubled in the past year, while the $1.4B market cap industry peer Coeur d ‘Alene Mines (NYSE:CDE) has appreciated only 25%. Major Canadian brokerages cover GRS and S&P reports that for fiscal year 2006, analysts estimate GRS will earn $0.83.
For fiscal year 2007, analysts estimate that GRS's earnings per share will grow by 71% to $1.42. On a trailing PE basis, GRS trades at 45 times, but earns 13.6% net margins. There is a significant upside if the mine development plays out.
GRS 1-year chart:
By Philip Barton, Contributor - Investopedia Advisor
At the time of release Philip Barton did not own any shares in any of the companies mentioned in this article.