Pescod Newsletter
THE GOLDEN GIRLS
We are very much used to hearing the old saying “Sell in May and Go Away” but this year was different. Concerns once again were raised about Europe, the markets corrected, but the junior resource sector absolutely tanked. An additional problem has become apparent for junior miners and that’s that with more concerns about the gold sector and where it may head next, many will find it very tough to get financings done at any price. Without financings to explore or develop projects, interest withers and we believe there are many junior stories out there that over the coming years will simply disappear.
This should not affect the “Golden Girls” we believe and hope that Atna Resources,SilverCrest Mines and Belo Sun Mining are three juniors that should do quite well, assuming again that markets regain some luster in the precious metals sector.
We also believe that all are potential take-over targets. The recent take-over of Trelawney by IAMGOLD has helped invigorate the sector a bit and these three in particular.
In the ugliness of the last two months, Atna Resources has stumbled from $1.50 to under
.90; SilverCrest Mines from $3.15 to under $2.00 and Belo Sun, got off relatively lightly, but still dropped from $1.20 to under
.80.
Now Belo Sun has just announced a new resource, closing in on 5 million ounces in relatively safe Brazil.
SilverCrest Mines has production at its first mine—the Santa Elena and first quarter production hit 134,000 ounces of silver and 9400 ounces of gold. The second bigger mine should be on stream in the next twenty months or so.
Showing a sign of the times though, Atna Resources today announces a shareholders rights plan and again we hope all three of these become take-over targets down the road. With the sell-off in many of these good junior stories, they certainly become much affordable to somebody big, looking to buy on the cheap and expand production.
Atna recently announced that their Briggs operation recovered a total of 33,000 ounces gold last year, but down the road they expect the Briggs mine to contribute between 45,000 and 55,000 ounces per year.
The Pinson mine is hoped to be fast-tracked and could see additional production in 2013 of 47,000 ounces and 87,000 ounces in 2014. Which isn’t bad for a small company with not a lot of paper out.
SilverCrest is the top pick of analyst Nicholas Campbell at Canaccord; Belo Sun is the top pick of Eric Zaunscherb, formerly at PI Financial and we believe off to Morgan Stanley in London and Atna Resources is the top pick of Wendell Zerb of Canaccord.