Auguries—Original Gangstas
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If there is any truth to the predictions of Sinclair, Davies and Hinde, this would meet the condition for junior-equities recovery set by Peter Grandich: “I suspect at best we shall see an ‘L’-shape recovery for the remainder of 2012, as heavy tax-loss selling is likely to hit as early as late summer (and any significant rallies shall be deemed by many as a chance to end or lessen the pain). The only hope of a big, sustainable rally would be on a strong rise in gold towards $2,000 an ounce.”
Failing that, the big boys certainly have the means to instigate a feeding frenzy. At Seeking Alpha, Simit Patel observes, “The market cap of the entire TSX Venture Exchange, where most explorers are listed, was just $43.5 billion as of May 2012. To put that in perspective, the market cap of Barrick Gold TSX:ABX, the world’s largest gold producer, is currently $38.73 billion. If companies like Barrick TSX:ABX, Newmont TSX:NMC and Goldcorp TSX:G—three of the largest gold producers that collectively have a market capitalization of greater than $94 billion, more than twice the entire TSX Venture Exchange—spend even a fraction of their market cap on explorers, the valuations could explode to the upside.”
And now to cases. Patel recommends investors assemble a combination of low-cost producers and royalty firms. His picks: Goldcorp TSX:G, Franco-Nevada TSX:FNV, Eurasian Minerals TSXV:EMX and Sandstorm Gold TSXV:SSL.
At the Globe and Mail, Shirley Won reports July 5 that Stuart McDougall of Jennings Capital is impressed by Semafo’s TSX:SMF 2Q gold production and rates it a “buy” with a target price of $11.50 (currently $5.30) and July 3 that Craig Hutchinson of TD Securities, while not impressed by the status of Thompson Creek’s TSX:TCM 2012 production guidance, still rates it a “buy” but has cut its target from $6 to $5 (currently $3.48).
The worm has turned. Even more importantly is that this fight in the $1,540 gold price area was not for regaining the old high in gold. The six attempts to kill gold, supported by some gold writers looking for favors from the riggers was a now failed attempt to keep gold from trading above $3,500 —Jim Sinclair
At the Financial Post, David Pett reports that Richmont Mines TSX:RIC has cut the estimate of reserves and production at its Francoeur gold mine in Quebec, and as a result, “will take a non-cash writedown in the second quarter of approximately $20 million to $25 million after tax.” Brian Christie of Desjardins Securities continues to rate the company “hold–speculative” and maintains a target of $10.50 (currently $4.02).
From the same source, Peter Koven reports that Pan American’s TSX:PAA Navidad silver project has been left moribund by the decision of Chubut’s governor to impose “a series of new royalties, taxes, and economic participation by the province.” Andrew Kaip of BMO Capital Markets has cut his price target from US$35 to US$27.50 (currently C$16.50) but “note[s] that it still looks cheap relative to its peers.”
Reuters reports July 5 that Société Générale has begun coverage of Semafo TSX:SMF with a price target of $7.10 (again, currently $5.30), July 4 that Raymond James has cut the price target of Pan American Silver TSX:PAA from $30 to $26.50 (again, currently $16.50), July 3 that CIBC has cut Thompson Creek TSX:TCM from $10 to $9.40 (again, currently $3.48) and June 29 that Canaccord Genuity has cut Alexco TSX:AXR from $9 to $8.50 (currently $4.69).
On July 5, Canaccord maintained a “buy” rating for Avion Gold TSX:AVR and a target of $1.75 (currently $0.55) and on July 4 maintained a “speculative buy” rating for Fortuna Silver TSX:FVI and a target of $6.50 (currently $3.92).
And at the Gold Report, Henk Krasenberg, founder of the European Gold Centre, says that “Tanzania is perhaps the most promising country for exploration.” There, he likes Tembo Gold TSXV:TEM and Helio Resource TSXV:HRC. He “adores” SEMAFO TSX:SMF, which “has producing mines in Burkina Faso, Niger and Guinea,” and has kind words for other African juniors: African Gold Group TSXV:AGG, Nevsun Resources TSX:NSU and Sunridge Gold TSXV:SGC.
Finally, Sir Paul McCartney, just turned 70 and richer than Bob Diamond and Jay Z combined, refuses to grow old gracefully. For starters, there’s his curious wine-coloured hair and his even more curious decision to release “classical” compositions under his name, even though he can’t read music. Most irritating is his ever-present moue. This is not a new affectation, as it can be witnessed in photographs going back a half-century. Once a come-hither look, it now sadly suggests a man who can’t remember where he keeps his meds.
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