I started building our gold Bottom Fish list last summer after gold slid to below $1,200/oz. late in June. While the safer bet may have been to buy gold bars or (NYSE: GLD) SPDR Gold Trust, or to try and time gold's trend reversal by nibbling on shares of major gold producers on dips, I knew the biggest near-term gains are usually made in the junior explorers to mid-tier developers.
"Usually" is the key word, as over the last decade holding gold bullion or ETFs actually would have outperformed most mining stocks of all types and sizes, unless you regularly traded them. However, there have been many times such as the late 1970's and early 1980's, to back in the 1930's, when mining shares outperformed bullion and you could hold gold stocks for years and just let them run.
While gold seems to have made a solid double-bottom after retesting and holding $1,200, we can never be certain a bottom is fully in. I still don't see any reason to account for gold's sudden plunge last April, and there could always be another $200/oz. overnight sell-off if the powers that be want this again. All I can rely on is that most producers' all-in costs are around $1,200/oz., the Chinese are buying physical gold as fast as it can be produced, and the global economy is still sputtering, building debt and papering the world with tons of new currency; therefore a gold up-trend must be near.
Last month we mentioned the January Effect and Shrinkflation, and that U.S. stock markets that were up +30% last year may end 2014 lower after a poor January: NASDAQ -1.74%, S&P 500 -3.56%, and DJIA Dow Jones -5.30%. Time will tell if this holds true as markets have short memories and are making new highs again recently. On the other hand gold was up +3.26% in January and up +12.16% to date at $1,352.15/oz., after losing -28% last year. While I continue building positions in mining stocks that remain beaten-up and quiet, I haven't added to others that have jumped recently. Why raise your average cost chasing stocks you already own that tend to move higher over the winter anyway?
Major mining conferences, like PDAC March 2-5, are when miners tend to release lots of news. While this boosts short-term trading plays, again I look for quality near to longer-term leveraged gold plays that haven't popped yet. My point is the odds for higher gold prices keep improving and that gold can be bought cheaper in the stock market, but I'm betting that I'll get one more shot to complete positions at somewhat lower than today's gold share prices, probably over the quiet summer period.
Late last spring and going into tax-loss selling season in December, we mentioned then that it was time to start bottom fishing gold mining stocks again. With thousands to choose from, I started my small-cap gold bottom-fish list, most at less than a $1B market-cap, based on those gold stocks posted on our website's mid-day market movers daily Hot Sheet. These filtered gold stocks were also posted in our October 23 newsletter, Gold: Rally Or Retest $1,200; 35 Stocks For Your Bottom Fish Radar, with brief company descriptions and the news headlines that caught our eye at the time.
Below are these 35 gold stocks again, with their performance from October 23, 2013 until now.
Then | Now | %Chg | Linked Quote Tickers & Company Name
$0.08 $0.06 -25.00% (TSX: CPN) Carpathian Gold
$0.04 $0.03 -25.00% (TSX: EVG) Evolving Gold
$4.98 $3.82 -23.29% (NYSE: IAG)(TSX: IMG) IAMGOLD
$0.23 $0.18 -21.74% (TSX: IRL) Minera IRL
$0.73 $0.61 -16.44% (AMEX: BAA)(TSX: BAA) Banro
$0.20 $0.18 -10.00% (TSX: LPK) Lupaka Gold
$0.03 $0.03 +00.00% (TSXV: GAL) Galantas Gold
$0.58 HALT HALT? (TSX: CSI) Colossus Minerals
$0.69 $0.70 +01.45% (AMEX: XRA)(TSX: XRC) Exeter Resource
$1.20 $1.24 +03.33% (TSX: TXG) Torex Gold Resources
$5.19 $5.59 +07.71% (AMEX: SAND)(TSX: SSL) Sandstorm Gold
$0.85 $0.95 +11.76% (TSX: SUE) Sulliden Gold
$5.03 $5.63 +11.93% (TSX: CG) Centerra Gold
$1.50 $1.72 +14.67% (TSX: TMM)(AMEX: TGD) Timmins Gold
$0.88 $1.06 +20.45% (TSX: CEE) Centamin
$0.19 $0.23 +21.05% (OTCQB: CLGRF)(TSX: CRJ) Claude Resources
$0.85 $1.03 +21.18% (TSXV: AOT) Ascot Resources
$0.08 $0.10 +25.00% (TSXV: EGX) Ecuador Gold & Copper
$2.38 $3.05 +28.15% (NYSE: MUX)(TSX: MUX) McEwen Mining
$0.21 $0.27 +28.57% (TSXV: GEG) Ginguro Exploration
$0.33 $0.43 +30.30% (TSXV: TGM) True Gold Mining
$0.16 $0.21 +31.25% (TSX: SGR) San Gold
$0.20 $0.27 +35.00% (TSX: OMI) Orosur Mining
$4.10 $5.62 +37.07% (AMEX: ANV)(TSX: ANV) Allied Nevada Gold
$0.11 $0.16 +45.45% (TSXV: VIT) Victoria Gold
$0.15 $0.23 +53.33% (TSXV: MTO) Metanor Resources
$0.13 $0.21 +61.54% (TSX: ATN) Atna Resources
$2.12 $3.55 +67.45% (TSXV: PRB) Probe Mines
$0.47 $0.79 +68.09% (AMEX: GSS)(TSX:GSC) Golden Star Resources
$0.50 $0.90 +80.00% (TSXV: TXR) TerraX Minerals
$0.29 $0.60 +106.90% (TSXV: CGT) Columbus Gold
$0.38 $0.87 +128.95% (AMEX: LSG)(TSX: LSG) Lake Shore Gold
$0.33 $0.89 +169.70% (AMEX: THM)(TSX: ITH) International Tower Hill Mines
$0.09 $0.27 +200.00% (TSX: CRK) Crocodile Gold
$0.07 $0.23 +228.57% (TSXV: BG) Barisan Gold
First posted on our daily Hot Sheets off of their lows after late June of last year, many of these gold stocks had already started to recover by the time they were added to this list and updated as a group on October 23. Since then, posted worst to first above, 6 of these gold stocks are down, 2 are the same or halted, and 27 are higher, with the biggest loser at -25% and the biggest gainer at over +228%.
The overall 4-month percentage gain of our group of 35 small-cap gold stocks is +40.50% (annualized it's about triple this). Not bad considering that the (NYSE: GDX) Market Vectors Gold Miners ETF returned +1.19% and the (NYSE: GDXJ) Market Vectors Junior Gold Miners ETF returned +4.02%.
Here's 12 more filtered gold stocks that made our daily Hot Sheets since Oct. 23, with the first date and price posted, current price, brief company description and news headline that caught our eye.
(TSX: ME) Moneta Porcupine Mines, Feb. 28, 2014 at $0.16 now $0.18
- 100% of 5 gold projects in Timmins Ont., 2.02 g/t Au over 114.5 m in volcanics near Golden Hwy.
(TSXV: NEV) Nevada Sunrise Gold, Feb. 27, 2014 at $0.435 now $0.45
- JV Partner (T.PLG) Pilot Gold Reports 6.85 g/t Gold Over 41.7 m at Kinsley Mountain, Nevada
(AMEX: RBY)(TSX: RMX) Rubicon Minerals, Feb. 21, 2014 at $1.35 now $1.39
- developing its Phoenix Gold Project in Red Lake Ont., C$100M Bought Deal at C$1.55 per Unit
(TSXV: ICG) Integra Gold, Feb. 11, 2014 at $0.34 now $0.35
- 95.86 g/t Gold Over 2.0 m & 11.24 g/t Gold Over 9.0 m, Confirms Continuity of High-Grade Vein 7
(TSXV: OCO) Oroco Resource, Feb. 7, 2014 at $0.11 now $0.075
- Guerrero Gold Belt in Mexico, Wins Xochipala Appeal; Reports Initial Production at Cerro Prieto
(TSXV: CJC) Canada Strategic Metals, Feb. 4, 2014 at $0.09 now $0.09
- Wide Gold-Bearing Zone with 3.78 g/t Gold Over 27.95 m Incl. 7.21 g/t Au Over 7.00 m at Sakami
(AMEX: MGH)(TSX: MMM) Minco Gold, Feb. 3, 2014 at $0.52 now $0.495
- 51% Changkeng & 100% Longnan gold projects China, 22% Minco Silver, not aware why shares up
(AMEX: VGZ)(TSX: VGZ) Vista Gold, Jan. 17, 2014 at $0.56 now $0.68
- Mt. Todd gold project in Australia, had 24.9% of Midas Gold, others, Guadalupe De Los Reyes LOI
(TSX: TGZ) Teranga Gold, Dec. 12, 2013 at $0.58 now $1.12
- West Africa gold producer/explorer, Completes Stream Trans., OJVG buy & Retires US$30M Debt
(TSX: PVG)(NYSE: PVG) Pretium Resources, Nov. 22, 2013 at $5.53 now $7.40
- high-grade gold Brucejack Project in n-B.C., Continues Bulk Sample, Surpasses Target of 4,000 ozs.
(TSXV: CMM) Castle Mountain Mining, Nov. 19, 2013 at $0.62 now $1.08
- past producing heap leach gold mine in Calif., Mineral Res. Est. Incl. Ind. 3.15Moz. & Inf. 1.06Moz.
(TSXV: UGD) Unigold, Oct. 24, 2013 at $0.085 now $0.08
- 2Mozs. in Dominican Rep., Candelones Ext. Int. 423.6m Avg. 1.07g/t Au incl. 38m Avg. 5.13g/t Au
Japan, China, Germany & Uranium Supply Squeezes—U3O8 Prices Set To Soar
If you have been reading our Small-Cap Stock Observer newsletters then you know we believe in the renaissance of nuclear power and in the opportunities available in uranium miners. These were some of the highest flying stocks prior to the Fukushima Daiichi accident that happened three years ago today. Although their investment fundamentals have only improved, with more reactors in the works now than even before Fukushima, these stocks were severely crushed and are just starting their comeback which we believe could last for years.
Various uranium investment catalysts that we have outlined before are already underway. Don't be fooled by the U3O8 spot price that sits quietly at only $35/lb., look instead to the recent price and volume action in uranium mining shares and to all the bullish nuclear power related news lately.
In 2013 LNG imports drove Japan's record annual trade gap to $112B. Most of this deficit came from the estimated $75B cost to replace nuclear power. Utilities have had no choice but to increase rates to avoid further losses, and Japan finally realizes it must restart its reactors. Some analysts predict 10-15 restarts this year, and up to 35 reactors over the next few years, with uranium purchases needed in addition to any stockpiles to maintain security of supply and relationships.
For some time we have been saying that Japan's reactors will not only be restarted but that they will have to fast-track the process to avoid further political backlash over power blackouts, higher costs and fiscal deficits, and from lower-targeted CO2 levels going the wrong way, all since their reactors were shut down. Last July Japan's newly formed Nuclear Regulatory Agency (NRA) started reviewing nuclear plant restarts which included public comment at local town hall meetings. A few weeks ago the NRA said it will create a priority list of plants that meet its earthquake and tsunami criteria, as early as this month—6 pressurized water reactors are likely to be approved first.
Last month Yoichi Masuzoe, backed by Japanese Prime Minister Shinzo Abe (both pro-nuclear), was strongly elected new governor, which should expedite the process of restarting Japan's 48 operable reactors—world's second largest fleet. The government even approved a plan for Tokyo Electric to rebuild Fukushima based on reopening Asia's largest nuclear plant—Kashiwazaki-Kariwa in the Niigata prefecture.
While announcements related to restarting Japan's reactors continue to be the major short-term catalyst in lifting the U3O8 spot price, China will be uranium's major long-term demand driver. Nuclear reactor builds worldwide are set to more than double by the year 2030, with China leading the pace with 20 operable reactors, 28 under construction, 58 planned, and 118 proposed.
China is now the world's largest car market, which on top of its huge coal and other dirty fossil fuel burning power infrastructure has created so much pollution that smog masks are a necessity. Nuclear power is not just growing because it will clear the skies for tourists visiting the Forbidden City, China recognizes the importance to not be as dependent on imported fuels.
Japan now realizes this again, and I wonder how much of Western Europe's and especially Germany's noticeable silence on the current crisis in the Ukraine has to do with energy security, not wanting to provoke Russia's Gazprom into turning off the natural gas tap in the cold of winter? This also begs the question how long will it be before Germany and others backtrack on recent nuclear plant shutdowns, not just because nuclear power is cheap and clean, but because it represents energy independence?
Uranium mines are the most highly regulated, taking much longer to permit or to put back into production. Large uranium mines continue to defer expansion plans or close, many not economical until U3O8 spot prices double. (TSX: PDN) Paladin Energy just suspended its high-cost 85% owned Kayelekera Mine in Malawi, Southeast Africa, representing 2% of global uranium production.
France's major uranium miner Areva in Niger, West Africa, remains locked in contract negotiations, which ranks fourth in production by country and could further squeeze an already tight uranium market. Kazakhstan's production has grown for years and now ranks first, but is likely to flat-line at around 60Mlbs./year until prices strengthen. The 20-year HEU Agreement that recycled Russian warheads has ended, removing 24Mlbs./year of supply. Uranium has no commercial substitute and all of this sets the stage for uranium prices to move up violently at some point.
After one of the coldest winters in decades persists into March, this January 17 article, Nuclear power clobbers the polar vortex, should give pause to anyone wanting less nuclear or more fossil fuel based electricity. We should be asking what went wrong with fossil fuel power this winter? Coal stacks froze, diesel generators didn't work, gas choked up pipelines and couldn't keep up with demand as prices skyrocketed. So much for cheap natural gas, in Nebraska prices shot up over 300%, and to around $50 per MBTU in NYC with electricity costs hiked from $139 to $225 per MWH.
On the other hand nuclear has provided reliable power since the 1950's, with steady electricity prices this winter even as output rose without a hiccup to full capacity. Without nuclear power there would have been more blackouts and real public danger on the coldest days when most needed.
Uranium Miners Breaking 52-Week Highs—Still Far From Pre-Fukushima & All-Time Highs
Uranium mining stocks became one of the most oversold and heavily shorted sectors after Fukushima. We have said that when these stocks finally decide to turn the corner that they will move fast into a bull market that could last for years. After making lows just a few months ago, most uranium stocks broke their 52-Week Highs last week and should be moved from your bottom-fish radar to your momentum watch-list. Here's 4 that we continue to watch closely and have mentioned before.
| Uranium Miners (click to research) | 52-Wk L | 52-Wk H | Now | Mkt Cap | PF High | High |
| (NYSE: CCJ)(TSX: CCO) Cameco | $17.27 | $24.96 | $24.56 | $9.72B | ~$40 | ~$50 |
| (AMEX: DNN)(TSX: DML) Denison Mines | $0.97 | $1.76 | $1.66 | $785M | ~$5 | ~$15 |
| (TSXV: FCU) Fission Uranium CDN$: | $0.52 | $1.71 | $1.70 | $559M | N/A | ~$1.71 |
| (AMEX: URZ)(TSX: URZ) Uranerz Energy | $0.80 | $1.97 | $1.72 | $148M | ~$6 | ~$7 |
Cameco is the largest publicly traded uranium miner, with projects worldwide and is the biggest producer in the Athabasca Basin. This large-cap has close to a $10B market-cap, is widely followed by analysts and pays a dividend. This all represents higher safety and liquidity, however I tend to look to the majors on market weakness, not when they are at the top of their 3-year $16-$24 trading range.
Denison also holds one of the largest land packages in the Athabasca, plus projects in Africa and Mongolia. This mid-cap offers exploration, development and production, with takeout potential. Fission may also offer takeout potential some day and continues to be the most exciting uranium exploration play in the Western Athabasca. We first added Fission to our Top 30 Small-Caps in November 2012 at $0.35, which Denison bought out last year for its Eastern Athabasca assets. High grade drill results at the new Fission's PLS Project has propelled its market-cap to now over $500M.
Uranerz Energy is an advanced stage uranium development company anticipated to enter commercial production this year. The company holds a 100% interest in the Nichols Ranch uranium processing facility that will employ a relatively low-cost In-Situ Recovery (ISR) method at their first mine, which is located within the prolific Powder River Basin (PRB) of Wyoming.
Uranerz' January news announced completion of the infrastructure, electrical hook up, and initial testing of two deep disposal wells that are now ready to use. The initial well-field and processing facility is substantially complete with final adjustments being made to the control systems.
Nichols Ranch is anticipated on average to produce 1Mlbs./year over 13-years at a cash operating cost of $35/lb. For the first few years most this will go to purchase agreements with major utilities, signed when uranium prices were much higher. The mine is permitted for 2Mlbs./year, with Uranerz' satellite projects and 80k acres in the PRB providing lots of exploration potential to expand production.
The table above shows URZ' pre-Fukushima high at around $6 and all-time high at around $7/share. URZ' market-cap is the smallest on the list at $148M or $1.72 per share, even though it has completed the many de-risking steps that take years: to fund, permit and construct a mine. The kicker for Uranerz is that after a long and relatively quiet mine construction period concludes, URZ is already going up with the sector at an important time when it should also get re-rated as a producer. Instead of waiting for news anticipated any day about the U.S. Nuclear Regulatory Commission (NRC) completing pre-operational inspections, some analysts have already started raising their URZ targets.
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