Former Massachusetts governor Mitt Romney could be a boon to the junior mining sector if he wins the race to become the Republican Party candidate in the U.S. Presidential elections.
That’s the view of John Kaiser, the San Francisco-based mining analyst and long time publisher of the Kaiser Bottom Fishing Report resource investment newsletter.
Kaiser says victory for Romney could be pivotal to the health of the U.S. economy because it would eliminate the possibility that a “crazy fringe-type candidate” gets to enter the Presidential race.
“If it turns out to be Romney, it will not really make much difference who wins the Presidential election in 11 months from now because Romney will very likely align his policies with those of established interests which are not at all aligned with the Tea Party agenda,’’ Kaiser said.
A former director of equity research with PI Financial Corp. in Vancouver, Kaiser says the perception that Washington has become dysfunctional weighed heavily on stock markets last year.
But once the race for the Presidency is over, he believes the winner will focus on trying to fixing the U.S. economy, a move that would be bullish for both base and precious metals.
Still, Kaiser says investors cannot expect to see big movements in metal prices this year. It means the big trades will come when investors have accepted that metal prices are going to be stable, and that even at current prices, mining equities are significantly undervalued.
In keeping with that view, Kaiser has just published a list of “spec value hunter recommendations” that range from early stage exploration companies to project developers.
“The biggest leverage is in the exploration juniors because the market is extremely hostile to discovery- focused exploration,” he said.
Here are some of Kaiser’s stock picks:
He is keeping an eye on Empire Mining Corp. (TSX: V.EPC, Stock Forum), which recently announced a new find at its Bursa copper-gold project in Turkey. Trading at 15 cents this week, Empire has a market cap of $9.5 million, based on 63 million shares outstanding. The 52-week range is 72 cents and 13 cents. “They have generated a major copper target, which, if it turns out to deliver the sort of supergene enriched chalcocyte blanket that they think is there, this 15 cent stock could go up 10 to 20 times in value,’’ Kaiser said.
Kaiser says he has a large share position in Nevada Exploration Inc. (TSX: V.NGE, Stock Forum), which is using a different approach to looking for gold targets in Nevada. Trading at 7.5 cents this week, the company has a market cap of $8 million, based on 107.5 million shares outstanding. The 52-week range is 11.5 cents and $0.05 cents. “I think that Nevada is going to become a major focus for exploration, perhaps one of the earliest focuses for the return of exploration speculation in this market,” Kaiser said. For its part, Nevada Exploration is living and working month-to-month in terms of its financial situation. But Kaiser believes the prospects for this company remain bright. “This is one which also could suddenly become a very hot play,’’ he said. The junior is focused on advancing previously unexplored targets identified by groundwater chemistry.
Of the more advanced gold sector stories on his radar screen is Probe Mines Ltd. (TSX: V.PRB, Stock Forum). Trading at $2.17 this week, Probe has a market cap of $137 million, based on 63 million shares outstanding. The 52-week range is $2.70 and $1.01. The company is focused on the Borden lake property near Chapleau, Ont. So far it has outlined a NI 43-101-compliant resource estimate, based on 78 drill holes, of 300,000 ounces of gold and 32 million ounces of silver in the indicated category, plus 3.8 million ounces of gold and five million ounces of silver in the inferred category. Kaiser said the company can increase that resource and will deliver a preliminary economic assessment later this year. “This will give us a sense of what the cost structure is,’’ he said. As a result Probe becomes a proxy, not just for gold going higher, but for gold staying where it is right now, he said.
In the diamond sector, Kaiser is watching Peregrine Diamonds Ltd. (TSX: T.PGD, Stock Forum). Trading at around 80 cents this week, Peregrine has a market cap of $83.4 million, based on 104.3 shares outstanding. The 52-week range is $2.77 and 57 cents. Peregrine’s key asset is a 100% stake in Chidliak diamond project on Baffin Island, in the Canadian Nunavut. The Vancouver junior recently acquired BHP Billiton Ltd.’s (NYSE: BHP.ADS, Stock Forum) 51% stake in the property, which covers 8,580 square kilometers. “This got knocked back badly this year with BHP pulling out of the diamond sector,’’ Kaiser said.
In the more advanced category, Mountain Province Mining Inc. (TSX: T.MPV, Stock Forum) and (AMEX: MDM, Stock Forum) and partner De Beers Canada are working to secure permits for the Gahcho Kue diamond project at Kennady Lake in Canada’s Northwest Territories. Trading at $4.32 this week, Mountain Province has a market cap of $346.8 million, based on 80.3 million shares outstanding. Kaiser likes the fact that the company has outlined a crop of new targets in the Kennady Lake area. “I expect this to eventually be a $10 to $12 stock,’’ he said. “But if they eventually find similar high grade kimberlites on their own ground this year, then this becomes a discovery story, [as well as a mine development story].”