3 Gold Explorers With Near-Term Upside
Why should investors consider buying gold explorers? After all, these companies are considered speculative as they are not producing any gold - instead, they are just trying to discover and develop economical gold deposits.
Well, gold exploration stocks (GEOX) are highly leveraged to the price of gold and typically outperform miners (NYSEARCA:GDX) when gold rallies. Just a small amount of exposure to these types of companies can lead to big gains and have a positive effect on your portfolio's performance.
Please note: as I've pointed out before, I don't recommend holding more than 10% to 20% of your total gold holdings in these types of companies (I currently hold about 15% to 20% in gold exploration companies in my gold portfolio, but have a high tolerance for risk and have several decades to go until retirement).
Here, I've highlighted three gold exploration stocks that recently announced positive news which could lead to further upside in the near-term.
Bonterra is focused on exploring and developing its Gladiator project and Larder Lake project in the Urban-Barry Greenstone Belt, located in Canada. This deposit is actually located pretty close to Osisko Mining's (OTCPK:OBNNF) 1.5+ million ounce Windfall Lake deposit and Metanor Resources' (OTCPK:MEAOF) Barry deposit.
The company recently closed on a $5.2 million private placement with large cap gold miner Kinross Gold Corp. (NYSE:KGC) and is now well-financed, as it holds approximately $20 million in cash. While its Gladiator gold deposit only has a small resource base of 273,000 inferred ounces, it has seen limited exploration and is a very high-grade deposit with grades of 9.37 g/t and is being aggressively explored with three drills active. Past drill results include high grade intersections of 2 meters of 191.4 g/t, 3.8 meters of 16.8 g/t, and 2.5 meters of 137.4 g/t.
Meanwhile, its Larder Lake project is located just east of the historic Kirkland Lake mining district; it contains a historical resource of 917,000 ounces inferred at 5.5 g/t, and 43,800 ounces indicated at 4.07 g/t. The company is planning on updating the resource model and commencing a drill program this year, to expand upon the historical resource.
Bonterra has plenty of upside in my opinion, and I'm looking forward to seeing future drill results. With major shareholders including investor Eric Sprott, Kinross Gold, and Osisko Mining Corp., the company has major backing. On the downside, Bonterra's projects are very early stage and it has a lot to prove. I think investors willing to take on a bit more risk should consider shares here.
Barkerville Gold Mines (OTCPK:BGMZF)
Barkerville just released exceptional drill results at a new discovery on its flagship Cariboo gold project, a 4.8 million ounce gold project located in British Columbia, Canada. In fact, some of these drills were the best to date at the project.
According to the company, highlights of the drill program include 19.20 g/t gold over 54.40 meters, and ultra-high grade drill interval sof 272 g/t gold over .50 meters, 760 g/t gold over .85 meters, and 64.20 g/t gold over .50 meters.
The company has seven drill rigs operating at Cariboo, so expect steady news flow over the next few months.
This new gold discovery by Barkerville is also really good news for Osisko Gold Royalties (NYSE:OR), as the company owns 32 milion shares of Barkverille, plus a 1.5% net smelter returns royalty on Cariboo. In addition, Osisko owns the right to either purchase a gold stream or another .75% royalty on Cariboo for $12.5 million, upon completion of a feasibility study on the project.
I really like the upside of this stock and think the major backing by Osisko Gold Royalties (a holding of mine) is a positive sign. However, the one downside here is the fact that Barkerville shares have already jumped on this news, up close to 12% today as of writing and has more than doubled over the past month. The company has a market cap of $369 million on the TSX. Investors may be a bit late to the party here so to speak.
While shares may very well continue to rally, I would wait and hope for a pullback before building a position.
Eastmain Resources (OTCQX:EANRF)
I added Eastmain to my real-life gold portfolio back in August of 2016. As I pointed out in that article, I mainly bought the stock because I like Eastmain's upside potential at its Clearwater project in Canada, where the company has already defined a 951,000 ounce high-grade gold resource. Another positive is major gold miner Goldcorp (NYSE:GG) owns 10.5 million shares or 6% of the company; Eastmain is joint-ventured on the Eleonore South project with Goldcorp.
Eastmain recently announced some pretty positive drill results in two separate news releases. First, the company says it intersected 8.31 g/t gold over 13.3 meters during infill drilling at the Eau Claire deposit, along with other high-grade intersections, including 11.4 g/t gold over 2.5 meters and 8.95 g/t gold over 4.6 meters. Next, it announced the intersection of 14.1 g/t gold over 6.2 meters, just 34 meters from the surface, along with other high-grade intersections at its Eau Claire deposit.
My thoughts haven't changed much on Eastmain since I first bought shares. While the stock hasn't performed that well, I continue to believe in the upside of this company, and I think recent drill results were positive and will lead to resource growth. I plan on adding to my existing position sometime over the next few weeks.
Disclosure: I am/we are long OR, EANRF.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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