The precious metals penny stocks on our list are trading at a discount to next year’s cash flow
SmallCapPower | November 28, 2017: With gold hovering around the psychological barrier of US$1,300/oz, interest in gold and silver stocks might return quickly. Today we have identified three precious metals penny stocks that trade at a discount to their producing peers and could snap back quickly in the next gold bull market.
Superior Gold Inc. (TSXV:SGI) – $0.92
Superior Gold is a Canada-based producer with its assets located in Australia. The Company’s Plutonic mine is guided to produce ~80,000 ounces of gold this year. It is also ramping up the nearby Hermes open-pit, which intends to add on another 10,000-20,000 ounces in the next one to two years. Superior is highly differentiated from its peers because it has generated significant free cash flow, relative to its size, year-to-date. SGI trades at 2.1x 2018 CF compared to the gold peer average of 3.2x.
- Market Cap: $88 Million
- Month over Month Return: -3.2%
- Forward Price to Cash Flow Per Share (2018): 2.1x
- Peer Average: 3.2x
Jaguar Mining Inc. (TSX:JAG) – $0.37
Jaguar is a Canada-based producer with assets in Brazil. The Company is guided to produced between 87,000-92,000 ounces of gold this year. JAG trades at 2.0x 2018 CF compared to the gold peer average of 3.2x.
- Market Cap: $120 Million
- Month over Month Return: 12.1%
- Forward Price to Cash Flow Per Share (2018): 2.0x
- Peer Average: 3.2x
Excellon Resources Inc. (TSX:EXN) – $1.66
Excellon is a Canada-based silver-zinc-lead producer with assets located in Durango, Mexico. Its Platosa mine has been Mexico’s highest-grade silver mine since the Company began production in 2005. EXN recently completed its dewatering optimization program, which has resulted in significantly improved production and costs. In Q3/17, the Company produced 226,173 ounces of silver, 1,582,794 lbs of lead, and 2,172,685 lbs of zinc, at all-in sustaining costs of US$11.62/ounce silver. EXN trades at 3.8x 2018 CF compared to silver producing peers which trade at an average 6.9x.
- Market Cap: $138 Million
- Month over Month Return: -6.2%
- Forward Price to Cash Flow Per Share (2018): 3.8x
- Peer Average: 6.9x
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own units in any of the companies mentioned above.
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