Ben Kramer-Miller
Gold & precious metals, macro, research analyst, deep value

Elgin Mining: Greater Efficiency At Bjorkdal Makes This Tiny Gold Miner A 'Buy'

Elgin Mining (OTC:ELGMF) has been one of the underperforming stocks in the gold mining sector, as the following chart of Elgin Mining shares in terms of the Market Vectors Junior Gold Mining ETF (NYSEARCA:GDXJ) illustrates.

(click to enlarge)

(Source: Stockcharts.com)

The reason for the underperformance has been rising production costs at the company's flagship Bjorkdal mine in Sweden. With rising costs and a falling gold price Elgin Mining's cash-flow was hit especially hard in 2013. This underperformance cascaded into the summer last year as management attempted to alter its mining strategy in order to bring ore grades up. This strategy backfired: Q3 grades fell and costs rose.

However in the third quarter the company realized...

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