The junior gold stocks we’ve dug up look attractive at these levels and may become takeover targets
SmallCapPower | March 27, 2020: Gold appears to have a bright future given the historic levels of monetary and fiscal stimulus in response to the COVID-19 pandemic. The recent rush to liquidity, though, has hit most stocks hard, with penny stocks and junior resource stocks, in many cases, experiencing the greatest selling pressure. Given that the gold price is still hovering near US$1700 an ounce, why are gold juniors with ounces in the ground now trading as much as 50% lower than a month ago? Today we have sifted through and found four junior gold stocks that look attractive at these levels and may become acquisition candidates.
*Returns are based on closing stock prices as of March 26, 2020
K92 Mining Inc. (TSXV:KNT) – $2.99
K92 Mining is focused on exploration and development of mineral deposits located in Papua New Guinea. The Company’s main asset is the Kainantu Gold Project, consisting of two gold deposits. On February 20, 2020, K92 announced drill results, which showed an average grade of 6.4 g/t Au + 15.9 g/t Ag + 0.9% Cu (8 g/t Au eq) at 2.4m. The Company is expected to release a new PEA, which could indicate a possible resource expansion to ~5.0M-8.0M oz/Au, suggesting a ~ 300K oz/Au per year mine. Given its high-grade gold results thus far, K92 Mining could end up being acquired by a large-cap producer (the property used to be owned by Barrick).
- % Fall From 52-Week High: 33%
Related: K92 Mining Stock Should Continue to Shine
Great Bear Resources Ltd. (TSXV:GBR) – $6.64
Great Bear Resources is a Canadian gold junior exploring in the Red Lake Region of northwestern Ontario. Its flagship property, Dixie, is located just south of the former Newmont Goldcorp operations, covering an area of 9,140 hectares. In May 2019, GBR reported 16.3m grading 26.9 g/t Au and 7m grading 44.5 g/t Au at the “Hinge Zone” at the Dixie project. Great Bear Resources’ early success prompted famed mining investor Rob McEwen, founder and former Chairman and CEO of Goldcorp, to take an 8% stake in the Company. GBR continues to benefit from a tight capital structure – just about 46 million shares outstanding and the Company asserts that it is fully funded for drilling for the remainder of 2020 with plans for up to 300 holes. Great Bear Resources currently has about C$27 million in cash on hand, most of which ($21 million) is earmarked for drilling in 2020.
- % Fall From 52-Week High: 31%
Read: ‘New’ Red Lake Gold Rush
Wallbridge Mining Company Limited (TSX:WM) – $0.56
Wallbridge Mining is currently developing its 100%-owned Fenelon Gold Property, which is located proximal to the Sunday Lake Deformation Zone, an emerging gold belt in northwestern Quebec with ongoing 100,000 to 120,000 metres exploration drill program in 2020 and a 33,500-tonne bulk sample and 75,000 metres of drilling completed in 2019. Wallbridge is also the operator of, and a 20% shareholder in, Loncan Canada Inc., a privately-held company with a large portfolio of nickel, copper, and PGM projects in Ontario’s Sudbury Basin. On March 2, 2020, Wallbridge Mining announced an agreement to acquire Balmoral Resources in an all-stock transaction, which would give the combined company a significant presence in the prolific Detour Gold Trend, where Kirkland Lake Gold has its Detour Lake gold mine. Eric Sprott will own 20% of the combined entity and Kirkland Lake Gold will own 8%, which would make KL the most-likely suitor for Wallbridge. Wallbridge Mining’s Fenelon Gold Property in Quebec could commence production later this year.
- % Fall From 52-Week High: 43%
Troilus Gold Corp. (TSX:TLG) – $0.66
Troilus Gold is focused on the mineral expansion and potential mine re-start of the former gold and copper Troilus mine in Quebec. Its most recent resource estimate (November 2019) showed 4.71 million Indicated gold equivalent ounces at 0.92 g/t along with 1.76 million Inferred gold equivalent ounces at 1.04 g/t. The Company has 2.5 million ounces open pit and another 3.5 million ounces underground with several miles of on strike unexplored claims. It is currently trading at less than $50 per gold ounce in the ground.
- % Fall From 52-Week High: 37%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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