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Saturday, April 03, 2010
Cheap Australian Small Cap Gold Stocks
Based on the excellent RCR Gold Company Review and some additional research I’ve evaluated a number of smaller Australian Gold Stocks. I’ve shown the highest rating ideas below.
| Company | Symbol | EV resv+resource us$/unit | Price to Book | Current Price (PPS) | % fm 12 month low | Mine | Blended NAV (PPS) | Distance fm target | All time high date | All time high price (PPS) | distance fm all time high | Mcap (M) | Debt (not net of cash) |
| Noresman | ngx.ax | $ 35.40 | 2.3 | $ 0.74 | 45% | WA | $ 1.35 | 82% | Nov-09 | $ 1.35 | 82% | $ 84.60 | 6m |
| Eleckra | ekm.ax | $ 23.00 | 2.9 | $ 0.11 | 250% | WA | $ 0.19 | 76% | May-07 | $ 0.65 | 519% | $ 20.56 | - |
| Dragon Mining | dra.ax | 1.39 | $ 0.08 | 66% | Finland | $ 0.19 | 123% | Oct-07 | $ 0.15 | 81% | $ 61.20 | 17m | |
| North QLD Metals | nqm.ax | $ 180.60 | 1.2 | $ 0.23 | 15% | QLD | $ 0.48 | 109% | Dec-07 | $ 0.53 | 130% | $ 65.40 | - |
| Cortona | crc.ax | $ 33.40 | 0.8 | $ 0.15 | 21% | NSW | $ 0.35 | 141% | Dec-07 | $ 0.52 | 259% | $ 24.68 | - |
| YTC resources | ytc.ax | $ 86.50 | 1.3 | $ 0.21 | 110% | NSW | $ 0.75 | 257% | Aug-07 | $ 1.43 | 581% | $ 34.48 | - |
These stocks are particularly interesting because I believe the macro environment supports a higher gold price. These stocks, because they are so small and under researched, have the potential for great returns regardless of the gold price (well not if it falls 50%) and the potential to scream higher if gold does.
The common trait of these opportunities is a very small market cap, a very low Price to Book (average is 4), and a low EV to total resource and reserves (average is 95).
The macro problem for Australian gold stocks is the Australian Dollar. Gold is worth less in AUD as the AUD strengthens. (The alternative view is the cost as a % of each oz increases if measured in gold.) This is a risk but substantially less of a risk while the AUD is at .91 USD. The AUD probably has 10-15% to purchasing power parity. You get the added bonus of a higher AUD gold price if markets (especially China) correct and the AUD falls though Australian stocks do not usually reflect this bonus, they just fall.
All of these stocks are sufficiently undervalued that they warrant further investigation. YTC seems particularly interesting. I’ll post some detailed analyses shortly.
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Disclaimer and Disclosure
Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
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