The gold juniors on our list could be undervalued based on their industry-leading trading multiples
SmallCapPower | February 23, 2017: With the gold price nearing three-month highs we have identified five gold juniors that appear undervalued; generating more revenues than their respected market capitalizations, and having industry-leading Price to Operating Cash Flows multiples of below 5.5x. Since it adjusts for liabilities, receivables, and depreciation, operating cash flow is a more accurate measure of how much cash a company has generated than traditional measures of profitability such as net income or EBIT.
Galane Gold Ltd. (TSXV: GG) – $0.07
Galane Gold Ltd. is a Canada-based gold producer and explorer. The Company has material properties, including the Mupane Property and the Galaxy Gold Mine, and several other prospective mineral properties. The Mupane Property is an operating gold mining venture situated in the North-East District of Botswana approximately 30 kilometers southeast of Francistown in Southern Africa, and includes over four mining licenses and a prospecting license. The Galaxy Gold Mine is located approximately eight kilometers west of the town of Barberton and over 40 kilometers west of the provincial capital of Nelspruit (Mbombela) in the Mpumalanga Province of South Africa. The Galaxy Gold Mine includes over 20 east-west trending gold ore bodies and approximately four prospects at 600 to 2,000 meters depth.
- Market Cap: $10 million
- Total Revenue (LTM): $42 million
- Price to Operating Cash Flow (LTM): 2.5x
- Debt to Equity (FY0): 64.8%
Primero Mining Corp. (TSX: P) – $1.00
Primero Mining Corp. is a precious metals producer with operations in both Mexico and Canada. Its segments include San Dimas, Cerro del Gallo, Black Fox Complex and Corporate. It owns over two producing properties, including the San Dimas gold-silver mine, located in Mexico’s San Dimas district, and the Black Fox mine, located in the Township of Black River-Matheson, Ontario, Canada. It owns properties adjacent to the Black Fox mine, Grey Fox and Pike River, which together with the Black Fox mine and the Black Fox mill, located on the Stock Mill property, comprise the Black Fox Complex. It also owns over two exploration properties, including the Cerro del Gallo gold-silver-copper project, which is located in the state of Guanajuato in central Mexico, and Ventanas, which is located in Durango State, Mexico.
- Market Cap: $189 million
- Total Revenue (LTM): $316 million
- Price to Operating Cash Flow (LTM): 3.1x
- Debt to Equity (FY0): 17.7%
Resources Inc. (TSXV: MTO) – $0.07
Metanor Resources Inc. is engaged in the acquisition, exploration and development of mining properties, as well as the commercial production of the ore reserves of its Bachelor Lake and Hewfran properties. The Company operates through three segments: the mining site (Bachelor mine), exploration and corporate. The Bachelor Mine is located approximately 90 kilometers northeast of the city of Lebel-sur-Quevillon, Quebec, Canada. The Bachelor property consists of approximately 240 claims and over two mining concessions covering an area of approximately 7,566.73 hectares. The Company is conducting surface drilling program on its Moroy Property.
- Market Cap: $31 million
- Total Revenue (LTM): $56 million
- Price to Operating Cash Flow (LTM): 3.8x
- Debt to Equity (FY0): 15.5%
Aura Minerals Inc. (TSX: ORA) – $1.83
Aura Minerals Inc. (Aura Minerals) is a Canada-based gold-copper production company focused on the operation and development of gold and copper projects in the Americas. The Company’s assets include the San Andres Gold Mine (San Andres), the Sao Francisco Gold Mine (Sao Francisco), the Aranzazu Copper Mine (Aranzazu) and the Serrote da Laje Project (Serrote). The San Andres mine is an open-pit heap leach gold mine located in the highlands of western Honduras, in the municipality of La Union, Department of Copan. The Sao Francisco mine is an open-pit heap leach gold mine located in the State of Mato Grosso, Brazil approximately 560 kilometers west of Cuiaba. The Aranzazu mine is an open-pit and underground mine in the state of Zacatecas, Mexico. Serrote is a development-stage copper-gold-iron project located in the central-southern part of the State of Alagoas, Brazil, approximately 15 kilometers northwest of the city of Arapiraca.
- Market Cap: $67 million
- Total Revenue (LTM)): $198 million
- Price to Operating Cash Flow (LTM): 4.4x
- Debt to Equity (FY0): 23.7%
Timmins Gold Corp. (TSX: TMM) – $0.52
Timmins Gold Corp. is a Canada-based gold producer engaged in the operation, development, exploration and acquisition of resource properties in Mexico through its subsidiaries, Timmins Goldcorp Mexico, S.A. de C.V. and Molimentales del Noroeste, S.A. de C.V. (MdN). MdN owns the San Francisco Mine in Sonora, Mexico. MdN also owns the Caballo Blanco Property, an exploration and evaluation asset in Veracruz, Mexico. The Mine and the La Chicharra pit are collectively known as the Gold Property. The Company also holds the Ana Paula gold project, which is an advanced stage development project in the Guerrero Gold Belt.
- Market Cap: $185 million
- Total Revenue (LTM): $196 million
- Price to Operating Cash Flow (LTM): 5.4x
- Debt to Equity (FY0): 13.2%