Montreal Notes, “Cinq a Sept”…….Mining stocks

December 11, 2013   There was an informational “cinq a sept” meeting at the University Club in Montreal on December 5.  Three mining companies presented their current strategies and responded to the attendees’ questions. Historically, when mining corporations’ stocks suffer through bear markets, are overlooked and oversold, it is often an ideal time to consider them.  So many, but not all, mining companies offer the potential for exceptional capital gains. In-depth research, at times like this, can be well worth it.

  The first presenter was NYSE (“PLM”) and TSX (“POM”) listed “Polymet Mining,” a copper, nickel and precious metals developmental company. The other two presenters, “Monarques Resources” and “Uragold” are Quebec based Junior mining stocks focusing on gold projects in Quebec. All three companies made fine presentations. In our opinion, they merit attention, particularly while their stocks’ prices languish at their multi-year price lows.  

   First presenter Polymet Mining is focused on commencing mining operations in the Mesabi Iron Range district in Minnesota. The project is located in the Duluth Complex, one of the world’s largest undeveloped deposits of copper, nickel and other precious metals. Polymet has a large cash position and I should note recently that officers made ten purchases of the shares over the last two months with no insider sales of the shares whatsoever.

   Most importantly, Polymet is diligently following Minnesota’s rigorous environmental compliance standards. The company has enormous reserves. Over the last three years, the stock’s price range has been from $2.61 to a low of .63 cents. Today, Polymet at $1.04 merits close attention.          

   The second presenter, Monarques Resources, symbol “MQR” is a Québec based exploration company with its projects located in the prolific Val D’or region on the Cadillac Fault. The region has a long history of gold production having produced over 175, 000,000 ounces of gold with years of further production to come. Worth noting is the fact that Monarques’ “neighbor mines” are a “who’s who” of major Canadian mining.  The company has eleven projects at present and management has acquired properties that by our analysis are extremely undervalued.

   Periods of bear market duress in metals’ stocks often create tremendous opportunities to purchase projects at astonishingly low prices which Monarques’ management has done. Monarques’ five largest shareholders own 52% of the shares with management owning 8%. Since Monarques’ creation in 2011, the stock’s price has ranged from .34 cents to .07 cents. Today the stock is selling at .11 cents. We are paying very close attention. Our site Canadianmineanalysis.com will follow Monarques very closely.

  Uragold Bay Resources (symbol “UBR”) was the third presenter and is an interesting situation. It is a junior exploration company trading on the TSX Venture Exchange with insiders owning 14% of the shares. Uragold’s business model focuses on developing low-risk, low-cost gold mining operations while exploring on core properties that hold the potential of discovering large gold deposits.

  The Uragold strategy is to do surface mining in an area successfully mined fifty years ago in a much more efficient fashion than was done in the past with archaic equipment by today’s standards. Yes, gold was produced successfully at this site, but indications suggest much more remains. The Company’s properties are located in the Southeastern region of Quebec. Moreover, the company properties benefit from extensive historical exploration work. Yes, a good deal of previous exploration information is available. Uragold is down from .22 cents two years ago to .04 cents. With what they have already shown, attention to Uragold is merited.  

Final Thoughts!                                                      

 Too often, major brokerage houses have overlooked stocks when they are literally “on sale.” The major brokerage houses (particularly the New York ones who needed bailouts) greatest talent seems to be in recommending stocks when they are popular, not when they are undervalued. However, the smaller brokerage houses have been good sources of low cap stock advice.  And another point, many people doing their own research can run rings around the so called expert analysts. 

Think about this: There are no guarantees in the difficult field of mining exploration, but by spreading the risk and doing the necessary due diligence, superb returns can be seen. What we have seen too often is that most investors invest in the mining stocks well after they have already moved up in price. Moreover, most investors refuse to take profits when they occur. Thank you, K.C. Grainger