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Gold for Cash for More Gold: Junior Gold Producers Rising to the Occasion
ANALYSIS -- ProspectingJournal.com -- With increasing volatility in the US dollar, the gold bugs...
About this update from Barrick Mining Corporation
[{"type":"text","content":"\nGold for Cash for More Gold: Junior Gold Producers Rising to the Occasion\n\nANALYSIS -- ProspectingJournal.com -- With increasing volatility in the US dollar, the gold bugs are licking their lips at the possible gains on the horizon for their yellow wealth. Despite the current run up of gold prices, there’s a mixed blessing in store for the gold miners as equity valuations have significantly lagged the performance of the underlying commodity. Case in point: Barrick Gold [TSX: ABX] saw its 52-week low come on June 17 of this year, despite the fact that gold had only recently powered through the $1500 threshold. While the equity prices have not reflected the run up in gold prices the cash positions on these large caps continue to bulge. With the current market selloff, acquisition targets are becoming increasingly cheaper. MA activity is surely to follow. In comparison, the expectations on junior and emerging producers are different. These companies are all striving to hit the next level from junior to mid tier to senior producer to achieve higher equity valuations. At this time, the route of the mid-cap junior producer may be the sweet-spot investors are looking for. Between organic growth, mergers and acquisitions, and grass roots exploration, emerging mid tiers offer the best risk reward ratio for investors. Back to June 17, when Barrick hit its 52 week low, junior producer Timmins Gold [TSX: TMM] received a 4% bump in share price the same day. Gold was gaining steam, along with the $US on that day, due to unrest in Europe and the resulting exodus from the Euro. Flashing forward to this week, where the dollar is under siege, London is on fire and gold is heating up, we must look at the same pool of juniors and determine who has the room to move and how fast can they spend their cash. Residing in the same peer group as Timmins, we find Endeavour Mining [TSX: EDV] which last week released an operational update that should provide enough evidence that they are poised to grow into that mid tier level. Currently trading at $2.30, Canaccord Genuity gold analyst Nicholas Campbell has Endeavour’s target price at $5. This price would represent a potential gain of 116%, based on the fact that relative to its peer group EDV is grossly undervalued. How undervalued?: While its peers collectively seem disconnected from the p...