Vista Gold – VGZ

Vista Gold’s 3-year chart shows us that despite $400 gold, it is about $6 below its prior high around $10 from mid-2002 and the $6 tops made over a year ago. What has Vista Gold done since this time? It has added significantly to its gold reserves, advanced its Bolivian project and announced it is in the process of getting Nevada based Hycroft into production in the near future. Yet, Vista is extremely undervalued when compared to relative valuations of similar companies. While we do not predict Vista to jump 400% to meet similar valuations say in the next few months, we do think 150%+ from today’s close is by no means impossible once the mainstream picks up on this unexpiring call option on gold this year. Thus, we added more to our short-term portfolio today at $3.91. Volume has been drying up here as sellers are becoming more hesitant to depart with their shares at such low levels. Be sure to keep an eye on this downtrend line as well and do not be surprised to see this stock finally run quickly higher once it gains some momentum and volume on its way up with gold! 

Durban Deep - DROOY

Our South African play appears to be reversing their seemingly endless stream of problems of the past several years. Last week they reported a reversal of losses, with the restructuring of NorthWest operations resulting in cost cutting (dramatically dropping their cash production costs), DROOY turned in a healthy profit! As they diversify outside of S. Africa and with the S. African central bank expected to continue to cut their high prime rate, look for the recent weakening of the Rand to help boost DROOY much higher. DROOY has been such a laggard that with the recent turnaround in fortunes, it seems to be the right time to reload the ½ of our position we took profit on just under $3.50 weeks ago. Initially we had wanted to get in all the way back at $3.10, we feel today’s acquisition at $3.18 was close enough and a very good deal considering it was just $4.10 in mid-January.  Volume down has been less than on the way up. Technically, Durban looks very well positioned to run back to $4.10 and beyond with the next gold move higher. The 2^nd DROOY chart is a 3-year price history giving us a good representation of its non-participation of gold’s move higher last year+ as well as its near $6 jump in May 2002.  

Royal Gold – RGLD

As gold heads higher so do Royal Gold’s royalties! Technically, RGLD was savaged by Barron’s short-seller inspired article in early 2003. It has never recovered since then. With nearly ½ its value erased from its prior highs, RGLD is at very good accumulation levels. Today we tested and held a good support level at $16. When gold reverses, we are easily back in the low-mid $20s and eventually should be ready to move back to $30. Their 2004 Q2 earnings will be released this Thursday. I expect a good quarter and added more on this short-term sale in its share price at $16.05.  

Newmont Mining – NEM

How can you go with the #1 gold producer with over 7 million ounces produced annually and now hedge free? As evidenced from its $20s to $50 price move, institutions are going to go after this highly profitable senior in the coming months, years of the golden bull market. At this time, we are at a good support and uptrend point. Below is a weekly chart of NEM going back over a year. If NEM is to drop furtherer with the HUI to say its 188 200-DMA, NEM will hold up well around $37. Today’s entry point marks about a 20% discount to where it was a month ago and a good point to reverse its recent retracement. 

Bema Gold - BGO

This high-flyer got away from us late last year. Anxious to get back in, today it did a near-perfect retracement to $2.88 support area giving us a great buying opportunity! Once the momentum returns, we will be headed right back up to the $4s. In the worse case scenario, BGO gets slammed back to $2.01 but that is not a possibility worth concentrating on since we took today’s risk/reward entry point. Yet, if for some reason we get a protracted correction, I would be an eager buyer again! If today’s reversal holds, we would have made a near perfect purchase of this correction at $2.89, just a penny from its low! 

Goldcorp - GG

Goldcorp may have gotten ahead of itself at the end of 2003, but our patience is now paying off. This low cost gold producer lost its momentum in part to its announcement it unloaded it several ton gold hoard at $388 gold last year but its Red Lake production and current expansion program is sure to bring very healthy profits in the years to come! We are back in GG today at $12.91 after a prolonged absence. Today’s reversal looks great and just above two support areas - $12.50 area should hold up! 

Kinross Gold - KGC

Kinross is another casualty of this pullback. At today’s $6.66 purchase, I think we are looking good as far as buying in near a low although it would be nice to see us above $7 soon. Their recent forward looking release showed that cost cutting measures are taking place and this “marginal” producer is sure to benefit from much higher gold prices as it is leveraged quite well.

Silver Standard - SSRI

If Vista Gold is the unexpiring gold call option, Silver Standard is the unexpiring silver call option. In fact, they are partners in Maverick Springs property in which SSRI has optioned to cover the cost of drilling in return for the right to all silver in the ground. As silver paralleled gold today, closing above $6 was a good finish to today’s trading reversal. If the paper liquidation game is over, we could be ready for a run up for $7 and higher. SSRI is well positioned to participate in this run-up as it is holding very well at the $10 area support. Today’s pullback allowed us to add at $10.68 and would be looking to double up on it if we happen to pullback to $8-8.50 support.  

Canarc Resources – CRCUF; CCM.TO

Having watched Canarc run for nearly a $1 last fall, it is great to have the opportunity to buy at the $.60 support as it has showed us it is capable of holding this support level. The company owns interests in one small producing gold mine in South America, two large gold deposits ready for development in North and Central America, and several strategic exploration projects that have the potential for significant new mineral discoveries. One of them being the Benzdrop property in Suriname which is now in phase two drilling possibly containing up to several million ounces. Drill results will be able to confirm these suspicions. For now, we are in at $0.62 waiting for a run for $1 or higher.

Randgold Exploration - RANGY

Anglo Gold’s earnings release last week stated low-grade ore was the reason for the 40% decrease in the Morila mine. “By Justin Brown

Shares in London-listed Randgold Resources on Friday declined 10%, following the poor production at its Morila mine in Mali, where output fell by 40% in the December quarter.

Morila is jointly held by world number two gold miner AngloGold (ANG), which has a 40% stake in the mine, and Randgold Resources with 60%.

At 1540, Randgold Resources shares on the London Stock Exchange were down 10% at US$21 from Thursday's close of $23.38.

Earlier, AngloGold reported that its attributable output from Morila was down 40% to 48,000 ounces in the December quarter, due to the decline in grade at the mine to 4.41 grams per ton.

Total cash costs at Morila soared a substantial 67% during the December quarter to US$182/oz.

AngloGold's share of Morila operating profit for the quarter fell 71% to $4 million.

"Commissioning of the plant expansion project (at Morila) was delayed to January 2004," AngloGold said in a statement concerning it December quarter results on Friday.”

If indeed the reaction was due to a 1 quarter anomaly, how could you not go wild buying RANGY at these levels?? We were happy to load up the boat at these levels picking many shares up today at $10.95. Volume was heavy in this illiquid stock so swings can be large if sellers or buyers gang up to one side too fast. It may head a bit furtherer lower as volume lightens up and this heavy selling diminishes here but as the sellers realize their loss, it may be too late to pick up these shares at these prices! 

Disclosure

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