Good News From the Market's Bad News Bears

While gold and silver have earned themselves a resurgent reputation as effective means of protection from the continued devaluation of paper currencies, the stocks of companies that mine these coveted metals have rather notoriously failed to keep pace thus far. Recent setbacks suffered by major miners Goldcorp (NYSE: GG  ) and Pan American Silver typify a long continuum of disappointing news that, to some degree, goes with the territory of investing in miners in the first place.

But, sometimes, when market sentiment grows so dim that buyers seem nowhere to be found, I find that positive developments can often go ignored and yield compelling opportunities to select some overlooked gems amid the wreckage. At the moment, I'm tracking four precious metal equities that have delivered positive news to the market recently, and have effectively fallen on deaf ears. I believe that each presents a fine target for investment, even amid the ongoing correction in the industry.

1. Aurcana (OTC: AUNFF)
After hailing Aurcana as "The Greatest Growth Story in Silver" back in February, I had the opportunity to attend the inauguration of Aurcana's new Shafter mine in Texas last month to get a first-hand look at the company's second mine. With a declaration of commercial production expected later this month, Aurcana is to be commended for a job well done. But the company's latest good news comes from the La Negra mine in Mexico, where Aurcana announced a 54% year-over-year increase in silver-equivalent production, after exceeding the mill's "nameplate capacity" by 21% during the second quarter. More importantly, fully 85% of the quarter's production came from "new discoveries or non-compliant resources," confirming that the mine's actual mineral inventory is not adequately reflected in the current 43-101-compliant resource estimate.

2. Endeavour Silver (NYSE: EXK  )
The consistent execution of a steady and sustainable growth trajectory by the well-respected management team at Endeavour Silver has been a thing of beauty to behold for several years running. The company's recent acquisition of the El Cubo mine from AuRico Gold (NYSE: AUQ  ) represents the culmination of a patient and deliberate search for an ideal addition to its operations portfolio. But Endeavour continues to illustrate the organic growth potential of its Guanajuato and Guanacevi mines by delivering a 22% year-over-year increase in silver production during the second quarter, as well as a bullish 59% increase in gold production. Those operations will continue to expand during the second half of 2012, with imminent additions from El Cubo offering the promise of a banner year for Endeavour.

3. Brigus Gold
After a decidedly challenging 2011 for both the company and its embattled shareholders, Brigus Gold is finally making the grade, and delivering effectively on its 2012 target to produce between  77,000 and 85,000 of gold during 2012. Both production volume and average gold grades rose simultaneously during the second quarter, which speaks to a highly effective ramp-up of Brigus' revised underground mining methods under the capable direction of mine general manager, Marc Bilodeau. More impressively, those positive results came despite a pair of temporary setbacks presented by nearby wildfires that shut down mining operations for several days in May, and mechanical issues with the mill's tertiary cone crusher in June.

4. Paramount Gold and Silver (NYSE: PZG  )
Paramount has been delivering to shareholders a veritable bonanza of value creation for several years, and to my Foolishly trained eye, I see no appreciable portion of that value reflected in the current share price. The market showered Paramount with bullish sentiment in late-2010, after the company discovered that mineralization at its San Miguel property in Mexico was contiguous with mineralization at Coeur d'Alene Mines' Palmarejo mine; but it has since grown stingy, and reclaimed much of that boost. I trust that additional good news is pending for Paramount, based on a preliminary economic assessment of its Sleeper project in Nevada due this month, and an updated resource estimate for San Miguel expected in August. Meanwhile, one need only look back a few weeks to find a typical morsel of the type of steady positive news flow that Paramount has delivered over the years. The company's last drill results in June discovered mineralization within a 1.2-kilometer gap between two previously known deposits. This demonstrates that "San Miguel`s Guazapares is one of the longest continuously mineralized structures in the Sierra Madre Metallogenic Belt."

Within a precious-metal mining industry that seems virtually abandoned by investors, following a painful array of operational setbacks and disturbingly poor stock performance, the stream of positive news flow from these four companies stands as a refreshing counterpoint that may offer investors some powerful upside, once the secular bull market for precious metals gathers steam, once more. I personally own stock in all four, and have issued bullish CAPScalls accordingly. I invite Fools to track the progress of these companies, and other precious metal stocks, by bookmarking my article list, or following me on Twitter. I hope you'll share your opinions of these companies in the comments section below.

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Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Aurcana, AuRico Gold, Brigus Gold, Endeavour Silver, Goldcorp, Pan American Silver, and Paramount Silver and Gold. Motley Fool newsletter services have recommended buying shares of Pan American Silver. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days


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  • Report this Comment On July 13, 2012, at 9:49 PM, chicgoods124 wrote:

    welcome to our store: ta.gg/5qp

  • Report this Comment On July 24, 2012, at 10:16 AM, arsenic123 wrote:

    I think your way off on Aurcana. The PLAN was for them to have already produced 1M oz from Shafter underground operations by the end of June 2012. The reality is that the underground operation isn't ready for primetime yet. It was never in the PLAN to mine a pit at this stage, that was done as an emergency stopgap to get ore to the mill, 70% of last quarters feed was pit ore, the other 30% - stockpiled underground from development. Why would you think that they reissued a feasibility study on June 23, 2012 w/o a press release if it was Good News? Where's the data on grade at the headframe? Wheres the plant recovery data? Wheres the report on silver PRODUCED from Shafter. All non existant because the reality is that the underground operation is not currently fully operational, and that is months and months behind thier projections. Remember, last year it was going to be 4M oz Mar 2012 to Mar 2013. There isn't evidence that they going to make that. Please give your buddies a call today and ask them if they have 50-100 underground miners working today. Then ask why they don't - ask what there MSHA permit status is and you will know more than the rest of us. Disclosure: I sold everything I had in Aurcana the day the new feasibility report was issued - so should the rest of the Fools.

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