Mid tier gold miner San Gold is on a tear heading into 2012

"These results provide a detailed account of one of the richest gold deposits ever discovered in Manitoba. It's extremely impressive that a gold deposit that wasn't even known about two years ago will be contributing 50% of our mill feed well into the foreseeable future," 

George Pirie, San Gold's President and Chief Executive Officer. December 20th, 2011.

 SanGold Corp. is a mid-tier Canadian producer of gold headquartered at Winnipeg, Manitoba. It currently owns the producing Rice Lake, Hinge and 007 mines and owns other gold mining interests in both Manitoba and Ontario, Canada.

Today's market cap is 606,000,000, up over 40% after yesterday's huge pop, with 312,677,000 shares outstanding. It has a 52 week trading range of $1.35 to $4.09 and is trading today under $1.90  Operating revenue is $75, 239,000, up 118% year over year. It has a three year return of 16.72%

8 Analysts have a buy recommendation on Sangold with a current consensus target price of $3.40 share.  Of course, that price was set well before yesterday's big news.  What was that big news?  Well it is the reason that the CEO George Pirie, made the above noted quote in his release yesterday. Basically, SanGold has released results of this years 200 drill holes at 007 and the numbers are astounding.  They represent the largest gold find in the history of Manitoba mining.  Here are some of those numbers:


 

• S922-11-036, intersecting 23.2 g/tonne over 11.5 metres at a depth of 362 metres
• S922-11-013, intersecting 110.1 g/tonne over 2.1 metres at a depth of 330 metres
• S922-11-049, intersecting 44.2 g/tonne over 4.3 metres at a depth of 348 metres
• S922-11-089, intersecting 63.0 g/tonne over 2.8 metres at a depth of 362 metres
• S922-11-091, intersecting 21.7 g/tonne over 7.4 metres at a depth of 362 metres
• S915-11-003, intersecting 11.8 g/tonne over 12.3 metres at a depth of 396 metres
• S915-11-024, intersecting 60.7 g/tonne over 3.0 metres at a depth of 275 metres
• S915-11-045, intersecting 45.6 g/tonne over 4.3 metres at a depth of 291 metres
• S915-11-084, intersecting 17.4 g/tonne over 9.4 metres at a depth of 269 metres
• S915-11-106, intersecting 18.1 g/tonne over 3.2 metres at a depth of 358 metres

 In an industry where  3 grams per ton is considered minable reserves, you can see from the results why 6 million shares traded hands yesterday and the stock jumped 40%.  With recent M&A action in this hot area
(2011 examples include: Eldorado buying European goldfields for 2.4B, Gold Corp buying Gold Eagle, Agnico buying into Pheonix, Agnico-Eagle buying Grayd Resources, Hedge Fund Luxor Capital buying Crocodile Gold, IAM gold announcing it is on the lookout for acquisitions etc.) I have become even more bullish on SanGold than I was even last month.

big miners have chosen the express route to increasing reserves by purchasing the known assets of their rivals rather than the heartache and headache of drilling core samples and filling out permit applications. San Gold is a growing, mid tier producer of gold. Yearly revenue is now 10% of market cap, new discoveries have increased the resource base, production will hit 100,000 oz in 2012 and SanGold has an earnings per share growth of over 30% for the past five years.

2012 should bring a whirlwind of M&A activity in the gold sector, and I plan on being in on the ground floor.  How about you?

Disclosure: long San Gold (SGR-TSX) and Brigus Gold (BRD).

Related articles

• San Gold expands deposit base - drilling results (retirefunds.blogspot.com)
• San Gold finds more gold at Manitoba mine, shares jump (business.financialpost.com)
• Eldorado to purchase European Goldfields for $2.5B (business.financialpost.com)
• San Gold Reports Operating Income of $12.1 Million and Quarterly Profit of $1.0 Million (retirefunds.blogspot.com)
• Brigus Gold Reports Additional High-Grade Gold Assays (retirefunds.blogspot.com)

Apollo Gold Corp - Undervalued and Unappreciated, for now!

Image by Talie via Flickr

In our previous article : The argument for Gold, we first updated you on Gold's value in this market, and the hidden gem that is Apollo Gold, and it's Black Fox and Grey Fox Mines near Timmons Ontario. The story just got a little more interesting today!

Apollo Gold announced today, the assay results of 7 holes (out of 29 drilled) during it's drilling program in August at it's Grey Fox site and those results are excellent! We are still awaiting the results of the other 21 holes which should be released near the end of October.

This reinforces my reasoning for increasing my holdings through Sept and Oct and I believe there is more good news to come. Gold Analysts from The Gold Report had this company at a strong buy before the drilling at "Grey Fox" even began, with a minimum target price between $1 and $2.79 (it is currently trading at .58) Those estimates were solely based on Apollo's new production at it's "Black Fox" Mine (approx 40,000 oz) since June and did not even consider the drilling at Grey Fox nor Apollo's recent acquisition of the 3.5 km "Pike River" property which straddles these two diamonds in the rough since it started drilling core at Grey Fox.

I expect those estimates to be greatly revised upwards over the next few months and into the 2010 Q1 reports. Here are those initial Assay results from Apollo Gold.

Apollo Gold Corp - (TSX: APG / NYSE Amex: AGT).

PS: I would like to address a comment about gold investments by the venerable oracle of Omaha, Warren Buffett who said: " Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their heads"

Gold has, in fact, great utility! Gold is the best conductor of electricity on the planet. If it were not for the high price (and high utility value) every household would have gold electrical wires instead of copper. Every electrician out there knows this simple fact.

Gold is used in Medicine, Dentistry, Industry, aeronautics, space flight, electronics, computers and food production not to mention the massive international jewelry trade and as a hedge against devaluing currencies.

With the new discoveries for gold tipping in the nano manufacturing of future solar panels enabling 100,000 times more electrical conductivity, and other gold applications in nanomanufacturing, anyone who believes that Gold has no utility, is not paying attention!

Currently, The Chinese Government is buying gold, and telling it's citizens to do the same. The Hong Kong government is actually in the process of moving it's gold reserves from London Banks, to it's own territory. In places as far flung as Istanbul Turkey, and Indonesia, people are buying up gold as a store of value against what the world perceives as a quickly weakening U.S. dollar. Gold has a 6,000-year history of preserving value against fiat currencies like the greenback.

Having regard to the above, I believe that, 2,000 oz gold is the "low end" of what is coming in 2010 and I believe that Apollo Gold is severely undervalued.

Update Oct 23rd - Apollo Gold signed an agreement with Elkhorn minerals to sell it's interest in the Montana Tunnels for $9 Million. This is another clear indication that Apollo Gold is clearing it's slate to concentrate on it's Grey Fox and Black Fox properties near Timmons Ontario which may be the largest pure gold discovery in the past 30 years.

Analyst Reports on Apollo Gold:(Which don't include the Grey Fox Drill Results)

1. . . .We continue to recommend the shares of Apollo Gold Corp. with a SECTOR OUTPERFORM rating."
-KERRY SMITH, HAYWOOD SECURITIES (10/16/09)

2. "We have left our assumptions for 2010 unchanged, resulting in no effect on our $1.00 target price and SECTOR OUTPERFORM rating" for Apollo Gold.

- -TARA HASSAN, M PARTNERS (09/30/09)

3..."Apollo Gold is very much a strong buy, an aggressive buy".

-Jay Taylor - J. Taylor gold Letter.


Update: Nov 2nd 2009 Reuters reports six more drill assay results from Apollo Gold!


Update: March 2010 Apollo Gold swallows Linear gold

Related articles by Zemanta

• Harrods adds gold bars to its luxurious image (seattletimes.nwsource.com)
• TSX ends session with triple-digit gain (thestar.com)
• Stimulus debts giving gold glitter (thestar.com)
• Toronto stocks rise as gold, oil rally continues (financialpost.com)
• Scotiabank sees big bucks in selling gold on the web (thestar.com)
• Dollar, Done For?: World Abandons George (abcnews.go.com)
• Rivals 'plot to end oil trading in dollars' (guardian.co.uk)
• Oil, gold surge as dollar dominance questioned (money.cnn.com)
• Scotia first Canadian bank to deliver gold to your door (financialpost.com)
• Gold Sees Double Benefit from Dollar Woes (blogs.wsj.com)
• Gold: Another day, another record (cbc.ca)
• Gold gives a precious insight into economy (telegraph.co.uk)
• Jewelry Buyers Accept High Gold Prices (online.wsj.com)