Diversifying Geo-Political Risk: Metal Miners for Every Region of the World

Below is a broad list of some well known as well as not so well known gold and silver miners, who have operations in different areas of the world. This is an attempt to bring up some miners that will help diversify geo-political risk. It also mentions some miners whose operations are in locations that tend to exceed expectations (regarding ore grade, reserve and resource base and life of mines), i.e. West Africa.

North America:

• Agnico-Eagle (AEM) : One of the best pure plays on Canadian Gold Mining in the Mid-Tier Group. Growing production from 580k in 2009E - 2 million ounces by 2013-2014.
• Kirkland Lake (KGILF.PK) - An Emerging Junior and another pure play on Canada. Production expected to grow from 48k oz in 2009E - 450k- 500k oz in 2012-2013. - Click here for a detailed explanation and analysis about this unique company.
• Apollo Gold (AGT) - Another Canadian Miner with incredible potential.
• Rubicon (RBY) - Canadian exploration company with great potential, most recently increasing their resource base to nearly 4.8 million ounces. This has been a trend for Rubicon, making it likely that it will continue. Great buyout target, along with Andean (ANDPF.PK and Ventana (VENGF.PK).
• Goldcorp (GG) - Key growth driver in the immediate term is Penasquito
• Coeur d Alene (CDE) - The majority of future production will come from Alaska, Mexico, Nevada. Two fo three flagship operations are located in Alaska (Kennsington) and Mexico (Palmarejo). - Click here for a more detailed analysis and map of operations.
• First Majestic (FRMSF.PK) - Mexico focused silver producer- 3 mines - Click here for a detailed explanation of their core assets and strategy for growth.
• Pan American Silver (PAAS) - Another silver producer focused on Mexico
• Silver Wheaton (SLW) - The royalty stream fueling near term growth is Goldcorp's Penaquito Mine in Mexico. Click here for an analysis regarding the impact Penaquito will have on Silver Wheaton or here for a General Overview of their Assets
  
• Franco-Nevada (FNNVF.PK) - Several Core assets in North America including the aforementioned Palmarejo mines ( 50% interest ) , Gold quarry, Gold Strike among several others. Click here for an in depth overview and analysis of their royalty assets.
  
• Royal Gold (RGLD) - Like Franco, RGLD has their Core royalty assets in North America - including their biggest growth driver in Andacallo, which they purchased from Teck (TCK) at bargain basement prices. Click here for an overview of their royalty portfolio.
  
• Minefinders (MFN) - the Dolores project (which mines 70% Gold and 30% silver) will be the near term growth catalyst for this company. Gold equivalent ounces are set to exceed 150k oz.s in 2010 from 100k in 2009E. Post-2010, growth is set to taper off dramatically to a high of 175k-180k GEO, barring any meaningful increase in peak production potential or acquisitions.
  
• San Gold (SGRCF.PK) - Similiar to Minefinders in terms of immediate and long term growth, but with the notable exception regarding their successful drilling program at the Rice Lake project, which has now found 3 high grade discoveries in just 18 months. From just 40k oz of production in 2009E to over 200k oz by 2012 (excluding any likely upward production guidance).

Other Mentionables: ECU Silver (ECUXF.PK), SilverCorp (SVM), Fortuna (FVITF.PK), Bear Creek (BCEKF.PK), Mag Silver (MVG)

Africa:

• Anglo-Gold Ashanti (AU) - More focus on South Africa - which is not my cup of tea.
  
• Randgold Resources (GOLD) - Growth drivers will be their interest in the Moto mines acquisition in the DRG. One of my preferred miners until the Moto acquisition.
  
• Redback Mining (RBIFF.PK) - Focus is on West Africa, i.e Ghana - with 1 world class mine in Tasiast and another potential world class operation in their Chrano operation. Click here for a detailed analysis.
  
• Semafo (SEMFF.PK)- Growth is beginning to stagnate, with an estimated 245-250k oz mined this year, increasing just 40-50k over the next 2 to 3, with peak production estimated to be between 290-300k oz. The good news is that it may prove to be another Red Back type miner, in the sense that it continually raises guidance and peak production potential.
  
• Keegan Resources - (KGN) - Worth taking a look into...

Australia:

• Newmont Mining (NEM) - Their big project at the moment and for 2010 is their Boddington operation in Western Australia.
  
• Newcrest Mining (NCMGY.PK) - Australia's largest gold miner, which has generated considerbale cash flow as it is in the middle of a growth spurt, reaching approx 2m oz in the next couple of years.
• Lihir Gold (LIHR) - Focus on the Asian Region with their flagship mine in Lihir Island (38m oz of proven reserves in just this one mine). Along with Coeur d' Alene, Lihir gets my vote for turnaround story of the year. Management has also demonstrated their ability to maximize shareholder value by finally deciding to sell the Ballarat Mine (which has never met expectations, in addition to wasting plenty of money), fixing their balance sheet in such a way that continued operations will not be interrupted, a MOPU (an upgrade to the mining platform, i.e electricity so that Lihir Island can finally reach full capacity) and exploration efforts can be maintained.

South America - Mainly Brazil, Chile & Argentina

• Yamana (AUY) - Has operations in Brazil, Chile, Argentina - Yamana has been frustrating if you have been an investor the last two years or so, with expectations failing to meet consensus estimates. This all changed in Q3 as expectations were exceeded, which hopefully turns into a trend. Click here for an in depth analysis of Q3 and the progree being made on the near term growth catalysts.
• Jaguar Mining (JAG) - Pure play on Brazil's Iron Quadrangle- Click here for an in depth analysis and quanataive valuation.
• Minera Andes - Argentina
• Colossus Minerals (CSIMF.PK) - Brazil
• Couer d"Alene Mines - Mines in Chile, Argentina, Bolivia*
• Andean - Great exploration company in Argentina - Like Rubicon, Andean is on my watchlist for buyout target in 2010.

China:

• El-Dorado (EGO) - Not one of my favorite miners until the acquisition of Sino Gold, which gives them a stranglehold on China Mining (which should make it very easy to get financing for future projects due to the recent investment interest by the Chinese government), as well as making it a great way to play China in general.
• CGA Mining- (CGAFF.PK)
• Jinshin - (JINFF.PK)

Disclosure: Long AEM Calls, KGILF.PK, RBY, JAG, CDE, RBIFF.PK, SLW (CS & Warrants), FRMMSF.PK (Warrants), FNNVF.PK (CS & Warrants)

Comments

[Marco G.]

Hello Hyperinflation,
I see may favorite, Great Basin Gold, did not make your list. See my report:
seekingalpha.com/artic...

Maybe, that is good as they will soon jump to mid tier gold producer status with ~ 400k oz Gold equivalent production. They are under radar presently with just 110k production from Hollister in Nevada. Burnstone is a brand new mine in South Africa commissioning startup in June 2010. It is a shallow low risk mine, the first new mine in Witwatersrand in 30 years. But, I know South Africa is not your cup of tea. The time will come for South Africa to come back into favor.

Great article, as I agree with most of your comments and thanks.

2009 Nov 25 08:59 AM

[Robey]

Hyperinflation

Minera Andes - Argentina

One would think Minera Andes deserves comment.
49% stake in San Jose Mine, which is one of the largest silver, (and some gold) producing mines in the world.
Additionally, Minera Andes owns one of the largest copper deposits in the world, (presently claiming 11.2 billion pounds of copper).
This Company, at present time, is flying under the radar. Minera Andes is projected to show a profitable 2009.

Robey

2009 Nov 25 12:32 PM

[mjrcme]

Thanks Hyper:
Check out B2 Gold (BGLPF) (BTO.TO)

2009 Nov 25 03:10 PM

[isaac the terrible]

Any thought on NAK?

2009 Nov 25 06:25 PM

[Hyperinflation]

I familiar with great basin, but its hard to put every emerging junior (under 1m oz of annual production) in any one article. Have you taken a look at Kirkland Lake? Its quite an interesting story as they basically bought a handful of mines that were thought to been cleaned out years ago, only to find multiple gold deposits. They recently finished some diamond drilling with great results. They are set to produce just 48k oz this year, jumping up to 500k by 2013 (though it will likely be higher as drilling results continue to show more and more reserves and total resources).

I guess I chose Kirkland because they not only have a 3 year production growth profile of 1000%, reaching approx 470-490k oz by 2013 from just 48k in 2009, but because the ongoing drilling results provide several potential catalysts for the stock. Should I have focused on Canada or the America's in general, great basin would surely be on there.


On Nov 25 08:59 AM Marco G. wrote:

> Hello Hyperinflation,
> I see may favorite, Great Basin Gold, did not make your list. See
> my report:
> seekingalpha.com/artic...
>
>
> Maybe, that is good as they will soon jump to mid tier gold producer
> status with ~ 400k oz Gold equivalent production. They are under
> radar presently with just 110k production from Hollister in Nevada.
> Burnstone is a brand new mine in South Africa commissioning startup
> in June 2010. It is a shallow low risk mine, the first new mine
> in Witwatersrand in 30 years. But, I know South Africa is not your
> cup of tea. The time will come for South Africa to come back into
> favor.
>
> Great article, as I agree with most of your comments and thanks.

2009 Nov 25 06:40 PM

[Hyperinflation]

I'm also familiar with BTO and it is another miner I could have listed. I think Kinross will end up buying them out as they have been increasing their ownership stake on a consistent basis, plus it would also help them reduce their reliance on their Russian operation.


On Nov 25 03:10 PM mjrcme wrote:

> Thanks Hyper:
> Check out B2 Gold (BGLPF) (BTO.TO)

2009 Nov 25 06:43 PM

[Hyperinflation]

I haven't yet been to South Africa, but have a few friends that live there, which along with non-stop mining accidents or killings has made tend to avoid it. They just tell me how bad it is and some experiences they have had, making me more bias against SA.
If they can get it together, owning mining companies in South Africa would be extremely lucrative due to the higher grade ore and bi-products like rhodium, palladium, etc instead of the typical base metals. What are your thoughts on West Africa?


On Nov 25 08:59 AM Marco G. wrote:

> Hello Hyperinflation,
> I see may favorite, Great Basin Gold, did not make your list. See
> my report:
> seekingalpha.com/artic...
>
>
> Maybe, that is good as they will soon jump to mid tier gold producer
> status with ~ 400k oz Gold equivalent production. They are under
> radar presently with just 110k production from Hollister in Nevada.
> Burnstone is a brand new mine in South Africa commissioning startup
> in June 2010. It is a shallow low risk mine, the first new mine
> in Witwatersrand in 30 years. But, I know South Africa is not your
> cup of tea. The time will come for South Africa to come back into
> favor.
>
> Great article, as I agree with most of your comments and thanks.

2009 Nov 25 06:51 PM

[notagoldbug]

fortuna silver is growing and undervalued.......should do 60 cents in cash flow in 2011 and 30 cents next year.....

slap a 10 mult and get 6 bucks...now 2

Dynast mines DMM just went into production in ecuador contrary to popular opinion its not a chavez type place and DMM represents the first mine in ecuador

should do from zaruma 1.30 in cash flow next year at 6 bucks

coremark put a 12 dollar target

its growing also with 2 more mines to develop and is very land rich and underexplored.....

i own large and profitable positions in both

2009 Nov 26 08:06 AM

[isk]

What about SA?

2009 Nov 26 09:34 AM

[User 422955]

Good work, Hyperinflation! Your spelling, grammar and syntax are better than I've seen. Keep up the good work.

The difficult task is to figure out which one(s), out of so many gold and silver miners, to buy. This article doesn't help with that.

2009 Nov 27 05:16 PM

[novice investor]

Thanks Hyper-I and SA; I agree with User 422955 it's hard to
decide which ones to buy with limited cash but I love the way you
"list your comments" with the name & symbol. It helps me to
keep track of who they are. Also listing the countries is helpful
for the political/weather/util... etc. if you watch the News,
or prefer not to invest in a certain country (for whatever your reason.)

2009 Nov 28 07:00 PM

[Hyperinflation]

I agree 100% as mining is an inherently risky industry. I would definitely recommend having at least 25%-50% (depending on your knowledge of the industry and individual miners) in gold and silver royalty companies(as far as your allocation to these miners go). My largest position is in Silver Wheaton (SLW), with Franco Nevada (FNNVF.PK) / (FNV.TSX) being my 5th largest.

If I wanted exposure to the appreciation in gold and silver via mining equities, I would own both a gold and silver royalty company, the GDX and GDXJ ( giving you exposure to a diversified group of Senior, Mid-Tier, Junior and to a lesser extent exploration companies), as well as a few individual miners which catch your eye for whatever reason ( valuation, potential, growth, etc).

This is just my personal opinion but these are my personal favorites in each class of miners, all of which I own.

Senior Producers - I think Goldcorp is without a doubt the best Senior producer, being one of the few actually growing production as opposed to miners such as Barrick and Newmont. Barrick and Newmont have to engage in new flagship operations ( which require a few billion in capital requirements) just to replace the mines soon to go offline.

Mid-Tier - Picking a favorite in this group is much more difficult as my four favorites are all unique. That being said, this is how I would rank them.
Yamana (AUY) - They have finally started to get their act together and will likely be the first current mid-tier producer to reach the 2m oz/annum level ( with the exception of Newcrest). They also have a great portfolio of projects, which diversifies some mining risk. Furthermore, it is a great way to play South America (more specifically Argentina, Brazil, Chile).

2) El-Dorado Gold - (EGO) El-Dorado has been reporting great drilling results lately, which coupled with their acquisition of Sino Gold, makes them a great way to play China.

3) Agnico - Highest production growth profile of the mid-tier group ( from 580k in 2009 to an estimated 2m oz by 2013-2104. I would rank Agnico much higher given it has substantial exposure to mining friendly Canada, but it has also tended to trade with a rich valuation on all fronts.

4) Lihir Gold - A great turnaround story that doesn't get much attention. Their flagship mine, Lihir Island, is among the best in the world. Proven reserves nearly reaching 40m oz and a large resource base ( reserves are likely to increase substantially given the quality of this mine and the size of the resource base). But Lihir stands out a valuation play both in future cash flows as well as other metrics i.e reserve ratio.

Junior Miners-
1) Jaguar - Has a nice mining portfolio, one of the best 5 year growth profiles and incredible valuation.
2) Kirkland Lake - I will be writing an article on Kirkland Lake Gold as it is also a great story ( discussed in the article), incredible potential, great growth profile ( nearly 10 fold over the next 3-4 year based on current estimates which will likely be guided higher as they have conducted some very impressive drilling results). It is also focused solely on Canada, one of the friendliest mining countries.
3) There are numerous other, some of which are mentioned in the article and others by those leaving comments i.e Great Basin Gold.

Royalty Companies -
1)Silver Wheaton - ( 270% production growth from 2009 to 2013/2014), fixed inputs costs ( giving it 100% protection from inflation), royalty contracts with the two largest gold producers, largest contracts lasting in excess of 20 years. It also has additional upside potential in the several interests it has with the like of Aquilene ( to be acquired by Pan American).
2) Franco Nevada- More diversified, slightly better growth profile and better valuation than Royal Gold. It also has the added advantage of having an incredibly strong balance sheet, which will likely be used to fund future growth.
3) Royal Gold

Silver-
1) Silver Wheaton
2) Coeur d' Alene mines
3) Silver Standard
4) First Majestic
5) Silvercorp
6+) Fortuna, Pan American, Hecla, ECU, MAG silver

Hope this was of any help -

On Nov 27 05:16 PM User 422955 wrote:

> Good work, Hyperinflation! Your spelling, grammar and syntax are
> better than I've seen. Keep up the good work.
>
> The difficult task is to figure out which one(s), out of so many
> gold and silver miners, to buy. This article doesn't help with that.

2009 Nov 29 06:01 PM