Gold is off to its best annual start in over three decades: The precious metal topped $1,730 Friday on a disappointing U.S. GDP report. Gold's rally began earlier in the week when it rose to a 6 1/2-week high of $1,725 per ounce following the Federal Reserve's announcement that it will keep interest rates low through 2014.
A Reuters poll of precious metal analysts showed that most expect gold to perform strongly in 2012. Goldman Sachs expects gold futures to advance to $1,940 an ounce in 12 months, and Morgan Stanley projects that gold will reach a record average $2,175 in 2013, according to Bloomberg.
One way to play the gold rally is Andover Mining Corp. (TSX-V: AOX) (OTC BB: AOVTF), a Canadian junior mining company with holdings in Utah and Alaska.
AOX has enormous upside potential in the Sun deposit, its 45,920-acre copper-silver-lead-zinc-gold VMS (volcanogenic massive sulfide) prospect in the Ambler Mining District of Alaska. The Sun deposit is believed to be the second-largest known deposit in the region after NovaGold s (NYSE Amex: NG) nearby Arctic deposit.
The Company plans to drill 21 holes or 19,000 feet at the Sun property this spring. The Sun deposit currently has 76 drill holes or approximately 49,000 feet of historic drilling; the results of Andover's 2011 drill program led geologists to believe they had pierced the main vent. AOX expects the 2012 program to add substantial resources to the property's resource base.
As we previously discussed, AOX is also set to begin gold production this year at its Trixie mine in Utah's East Tintic Mining District, which should provide a major near-term catalyst for its stock. The Trixie mine previously recorded production of approximately 200 tons per day of gold and silver ore, and the mine's previous operators left a stockpile of approximately 4,500 ounces of gold and 38,000 ounces of silver on the surface to be processed.
AOX also has a stake in the Burgin project of Utah, a past base metal producer targeting 2.3 million tons with gross metal values exceeding $1.5 billion. According to a NI-43 101 preliminary economic assessment released in December 2011, the Burgin Extension Deposit has indicated resources of 23,000 ounces of gold and inferred resources of 17,000 ounces of gold.
AOX is a rarity among junior miners: The Company is gearing up for near-term production, holds tremendous resources in geopolitically safe areas, and currently trades at rock-bottom prices, offering investors a strong profit opportunity in the current gold bull market. For more information on AOX, you can download the most recent RedChip Research update on the Company or view AOX s presentation from our latest virtual conference.
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