A Trio of Junior Gold Miners

06/14/2017 2:50 am EST

Focus: COMMODITIES

Ralph Aldis

Senior Mining Analyst, US Global Investors Inc.

US Global's Ralph Aldis is a leading expert on mining stocks; here, the portfolio manager for the World Precious Minerals Fund (UNWPX) and the Gold and Precious Metals Fund (USERX) highlights a trio of junior gold miners.

The upcoming rebalancing trade on June 16 for the VanEck Vectors Junior Gold Miner ETF (GDXJ) — where they are expected to down weight their existing holdings in junior tiered companies and roll the proceeds into the larger mid-tired companies — has significantly depressed the prices in the junior gold space.

Specific opportunities we think offers investors an attractive entry point include:

Klondex (KLDX) (Toronto: KDX)

Klondex has 100% interests in three producing mineral properties: the Fire Creek Mine and the Midas Mine and ore milling facility, both of which are located in the state of Nevada, USA, and the True North Gold Mine (formerly the Rice Lake Mine) and mill in Manitoba, Canada.

Klondex also has 100% interests in two recently acquired projects, the Hollister mine and the Aurora (formerly known as Esmeralda) mine and ore milling facility, also located in Nevada, USA.  Klondex is conservatively managed as the company has been profitable since going into production in 2014. 

Their most recent quarterly earnings looked like a miss but this was due to their switch to US GAAP accounting versus IFRS. Klondex is on it way to producing 250,000 ounces of gold per year.

Kirkland Lake Gold (KLGDF) (Toronto: KL)

Kirkland Lake is a mid-tier gold producer targeting 530,000 - 570,000 ounces of gold in Tier 1 mining jurisdictions of Canada and Australia.

Kirkland Lake Gold's solid base of quality assets is complemented by district scale exploration potential, supported by a strong financial position with extensive management and operational expertise. 

Their Macassa is one of the highest grade gold mines in North America and their acquisition of the Fosterville Mine in Australia in 2016 has given them access to one of the great historic gold mining districts of Bendigo.

Wesdome Gold Mines (WDOFF) (Toronto: WDO)

First with changes at the board level and then new management, Westdome has entered a turnaround phase that is seeing the company rerate on its portfolio of Canadian assets. 

They produced about 50,000 ounces of gold in 2016 at the Eagle River Mine and recently when they drilled deeper at their Kiena Mine, which has been on care and maintenance since 2013, they encountered significant grades and thicknesses of ore than what had been mined in the past. 

It now seems likely Wesdome will be able to bring Kiena back into production and thus boosting their presence in the junior gold producer space.

Meanwhile, the World Precious Minerals Fund The World Precious Minerals Fund (UNWPX) gives investors increased exposure to junior and intermediate mining companies for added growth potential.

With a high level of expertise in this specialized sector, our portfolio management team includes professionals with experience in geology, mineral resources and mining finance.

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