After a promising start, the gold sector could be heading for another disappointing year in 2014. Despite this some gold stocks have performed well, including the Top 5 in the Ubika Gold 20 index. The following 5 stocks have been star performers in the Ubika Gold 20 so far in 2014.
Despite this some gold stocks have performed well, including the Top 5 in the Ubika Gold 20 index. The Ubika Gold 20, which was launched on May 2, 2014, is the successor to the Ubika Gold 50 Index, created in February 2010. Since its inception, the Gold 50 index return was 25% above that of the TSX Venture.
For most small cap investors there is a lack of good quality, widely available research and information on promising junior gold exploration companies. In selecting the companies, Ubika Research used a combination of qualitative and quantitative methodologies. Index constituents generally have certain market based criteria, including market capitalization between $2 billion and $25 million, three month average daily trading value above 100,000 and a price above $0.25. Ubika Research endeavors to select companies that can provide investors above average returns through earnings growth and exploration potential. Its selection process considers factors such as Net Asset Value (NAV) model, resource analysis, earnings criteria, management and geographical risk.
The following 5 stocks have been star performers in the Ubika Gold 20 index so far in 2014 (returns to date are based on the September 19, 2014 closing prices):
5. Premier Gold Mines Limited (TSX: PG): +93.1% YTD
Premier’s main asset is the Trans-Canada project near Geraldton, Ontario, with its Hardrock deposit containing a total Indicated resource of 4.87 million gold ounces, 3.97 million of which, at 1.5 grams per tonne (g/t), can be mined using an open pit method. The company expects average annual gold production of 253,100 ounces for the first eight years at an all-in sustaining cost of $738 per ounce. Its pre-production CapEx is estimated at $410.6 million.
Further upside to this stock could also come from Premier’s Cove project in Nevada, which has a historical (pre-43-101) grade of plus 10 g/t. The company currently has about $40 million in cash and investments in its treasury.
4. Romarco Minerals Inc. (TSX: R): +95.5% YTD
Romarco’s flagship Haile Gold Project is in the mining-friendly jurisdiction of South Carolina has about 2 million Proven & Probable gold ounces in addition to about 4 million Measured & Indicated ounces of gold at a little more than 2 grams per tonne.
Romarco estimates the project’s total capital costs at just US$320 million, and expects to mine this gold at a cash cost of US$379 an ounce, which includes silver by-product credits. The company also had about US$32 million in cash as of June 30, 2014, and recently announced a US$200 million debt financing mandate for the project.
Romarco forecasts mine construction to begin in 2015 with initial production anticipated sometime in 2016. Its expected gold output is about 150,000 ounces per year. About 70% of its stock is held by institutional investors.
In an interview with SmallCapPower.com (watch the interview here) on December 12, 2013, CymorFund CEO Larry Cyna, mentioned shares of Romarco at $0.37 as being a potential 10 bagger for investors.
3. Guyana Goldfields Inc. (TSX: GUY): +107.8%
Guyana Goldfields is developing its Aurora Gold Project in Guyana, South America, which contains a total gold resource of 6.54 million ounces in the Measured and Indicated categories (62.83 million tonnes at 3.24 g/t gold),in addition to 1.82 million ounces in the Inferred category (16.93 million tonnes at 3.34 g/t gold). Aurora is fully funded, and the engineering, procurement and construction management contracts are complete. Commercial production is scheduled for mid-2015.
First-year production is estimated at 126,000 ounces, with an expected increase to about 300,000 ounces by the sixth or seventh year. Aurora has an estimated a 17-year mine life, and all-in sustaining costs are anticipated to be less than $700 an ounce. Guyana Goldfields held US$68 million in cash and cash equivalents as of July 31, 2014.
2. Roxgold Inc. (TSXV: ROG): +173.4%
Roxgold is a gold exploration and development company, with its key asset being the Yaramoko Gold Project located in the Houndé green stone belt of Burkina Faso, West Africa. In April 2014, the company released Feasibility Study results for Yaramoko’s 55 Zone, which outlined an after-tax IRR of 48.4%, with a 1.6 year payback on initial capital, based on a gold price of US$1,300 per ounce. To date, Roxgold’s gold resource stands at about 800,000 Indicated ounces in addition to approximately 300,000 ounces of Inferred gold.
The company is spending $5 million towards exploration in 2014, with its Bagassi South region being identified as the next potential resource on the Yaramoko permit. Roxgold is planning to release an updated resource estimate sometime next year, which will include Bagassi drill results. The company anticipates production of 100,000 ounces of gold per year from Yaramoko.
Up to 70% of Roxgold’s outstanding shares are institutional held and the company has about $30 million in cash on hand at this time.
1. Rio Alto Mining Limited (TSX: RIO): +203.2%
What’s not to like about this stock? After striking a deal to buy Sulliden Gold, Rio Alto itself seems to be tempting takeover bait. The newly-merged company operating out of Peru is expected to produce about 300,000 ounces of gold annually within the next couple of years. Rio Alto forecasts its all?in sustaining costs of US$824 to $911 per ounce in 2014, and recently announced second-quarter net income $15.2 million. The company expects its cash flow to continue to grow into the future.
See all 20 gold companies in the Ubika Gold 20 index and their share price performances HERE >>
