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Two Junior Miners With Big Potential: TGB,PZG

|Includes:Paramount Gold Nevada Corp. (PZG), TGB

In my last mining stock article, readers asked for some good juniors to buy. PZG and TGB are my response. Paramount Gold and Silver (NYSEMKT:PZG) is a junior gold miner whose major mine just keeps giving great results with each subsequent mineral estimate drilling project. The latest estimate indicated that there are 2.65M ounces of gold equivalent at the San Miguel project. Apparently the plan is to drill to prove the reserves. Then management intends to sell out to a major. Some are estimating 10M ounces of gold equivalent by the time all of the drilling is done. Thus far there have been few disappointments. PZG has current market capitalization of 188.65M (Yahoo Finance). If the San Miguel project has 10M ounces of gold equivalents, that would be about $11B after it is mined. If PZG got 10% of that figure in a sale, you would multiply your money many times. If PZG only got 10% of 2.65M * $1100 = $2.91B * .1 = $291M, you would still do well. Plus PZG also has a project in British Columbia. PZG would have some residual value even after the sale of the San Miguel project. The chart of PZG is below:

PZG 1 year chart:



Another potential star is Taseko Mines (NYSEMKT:TGB). This is an older company that I think wants to become a major. TGB received its environmental assessment certificate for its Prosperity Gold-Copper Project from the BC Provincial Ministry of Environment on January 14, 2010.

It will likely take about 2 years and about $.75B to construct the mining facilities. After that TGB will be making huge amounts of money per year. The project is said to contain 7.7M ounces of gold and 3.6B pounds of copper. TGB sold a 25% interest in its Gibraltar mine (a different project) for $170M to help finance the Prosperity mine. Based on that sale price, the Gibraltar mine is worth about $680M. TGB has a market capitalization of only $678.6M. Its current price does not even seem factor in the value of the Prosperity mine. Plus there is TGB's Harmony project (also in British Columbia). It’s price/book is listed as 3.47. This could be part of the explanation. Regardless of the listed Price/Book, the likelihood of this being a great value is extremely high. TGB still has relatively low debt/capital at 22.69%. It has a current ratio of 1.15. It can pay its bills.

The permitting process has been going on for many years. The necessary permitting for the Prosperity project has at long last been obtained. The times are uncertain. The funding is worrisome, but you have to believe they will get this one done. This may be a great time to get in on a stock which will likely multiply your money many times over during the next few years. The permitting is no longer in question. Most of the speculation risk is gone. 7.7M ounces of gold * $1100/ounce = $8.47B. 3.6B pounds of copper * $3/pound = $10.8B. The total of the two = $19.27B (without figuring on expenses). Even 10% of this figure, makes the stock a bargain. The chart (below) looks good too.

The 1 year TGB chart:


I have yet to invest in either of these stocks, but I am seriously considering both of them. I may buy in the next few days.



Disclosure: I have no positions currently
Stocks: PZG, TGB