Top Mining Stocks Overlooked on Wall Street

As a guy who recently made his 1,000th stock pick, I recognize that I'm powerless over Motley Fool CAPS, and that my life has become slightly unmanageable. Still, there are worse addictions out there.

While I'm much more restrained in my real-money portfolio, CAPS provides a nice outlet for those baser trading instincts. Another great benefit of participating in the CAPS community is the chance to uncover fresh stock ideas. In honor of my achievement, I'm taking a look at off-the-radar companies to which my fellow players have given a thumbs-up.

Using CAPS handy new screener, I searched for highly rated mining stocks with little in the way of a Wall Street following. Here are some of the top results:

Company

CAPS Rating

No. of Analysts Covering

Aurizon Mines (AMEX: AZK  )

****

1

Great BasinGold

****

0

Lundin Mining (NYSE: LMC  )

*****

2

North American Palladium

*****

1

Stillwater Mining (NYSE: SWC  )

****

2

Taseko Mines (AMEX: TGB  )

*****

2

Yanzhou Coal Mining (NYSE: YZC  )

****

2


Mining? Oui monsieur!
Leading off is Aurizon Mines, one of several Canadian miners to crop up on the list. Unlike many overextended emerging miners, Aurizon is tightly focused on a single mining jurisdiction. If I asked you to name the most mining-friendly district in the world, Quebec probably wouldn't spring to mind. But there it is, topping the Fraser Institute's Policy Potential Index.  

In his bull pitch, my Foolish colleague Chris Barker (a.k.a. TMFSinchiruna) notes that he's "seen lots of great ore grades" up there in Quebec, and Aurizon's Casa Berardi (which sounds more like a line of Italian dry goods than a gold mine) is no exception. While modest in size at a bit under 1 million ounces of reserves, the mine's ore grades are off the charts at 9.3 grams of gold per ton. Last year, Goldcorp (NYSE: GG  ) used a cutoff grade of 3.5 grams per ton in estimating the economically viable resource at one of its own future Quebec mines.

Casa Berardi went into commercial production just over a year ago, and is slated for 160,000-170,000 ounces of gold output this year. This will provide a solid cash flow base to fund exploration both on site and at Aurizon's other early-stage properties. There's no question that a single-mine operation is significantly riskier than a portfolio of multiple assets, but I agree with my CAPS brethren that good things are on the horizon for Aurizon.

A tisket, a tasket, a base-metals basket
Lundin Mining, with a globe-spanning portfolio of assets, is a completely different sort of company. I think this company is also worthy of Foolish attention.

While they don't get a lot of press here in the States, the Lundins are a legendary mining clan. The late Adolf Lundin was a very successful petroleum engineer who contributed to the discovery of the world's largest natural gas field, offshore Qatar. Son Lukas races motorcycles across the Sahara for fun. These Swedes don't just sit in an office in Vancouver, smoking cigars. They are hands-on, serious, and seriously successful.

Unlike Aurizon, Lundin Mining focuses on industrial base metals like copper, zinc, and nickel. Not only that, but the Lundins will go to the far ends of the earth if deposits are attractive enough. That has led the company to Tenke Fungurume, an astounding copper-cobalt deposit in the Democratic Republic of Congo. The operator of this project is Freeport McMoRan (NYSE: FCX  ) , another company that's no stranger to challenging locales. When the mine comes online next year, Tenke will be the world's lowest-cost copper operation, with a minimum expected life of 40 years.

While Tenke is characteristic of the Lundins' flair for the frontier, the company's current mining operations all reside in Western Europe. The fact that Lundin shares trade around tangible book value is an indication that the company’s risks are pretty well, if not excessively, priced in today.

Join me in CAPS. We've got 105,000 members and there's always room for more.  

Related Foolishness:

The Lundins aren't the only ones hunting the globe for massive growth. Each month, the Motley Fool Global Gains team picks two international stocks poised to outperform. You can check out their current recommendations, along with all past picks, with a 30-day free trial to the newsletter service.

Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool has a rock-solid disclosure policy.


Read/Post Comments (3) | Recommend This Article (11)

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  • Report this Comment On May 30, 2008, at 4:19 PM, XMFSinchiruna wrote:

    I had looked into Lundin years ago, but they had fallen off of my radar as well. Thanks for the reminder!

    Interesting off-beat info on family too. :)

    From Quebec's Ministry of Natural Resources website:

    http://www.mrn.gouv.qc.ca/english/mines/index.jsp

    Québec's mining taxation system is one of the most advantageous in Canada, featuring one of the lowest taxation rates, and a credit on duties refundable for losses for exploration, deposit appraisal and mine development activities that is unique in Canada. In addition, Québec offers businesses having establishments and that carry on activities in Québec a refundable tax credit for mineral exploration activities.

  • Report this Comment On May 30, 2008, at 4:23 PM, pondee619 wrote:

    How do you properly/adequately keep track of over 1,000 stock picks

  • Report this Comment On June 03, 2008, at 11:33 AM, wiltshyre wrote:

    AZK is a good example of promotion over substance.Management failed at Sleeping Giant and Beaufor and are failing now at Casa B to the point that banksters forced early repayment of $15M. If minimum covenant requirements aren't soon met, repayment of remaining $40M could be forced as early as Sept. Total cost of production is north of $600/oz even as high grade is depleted.

    AZK has sufferedf 2 underground fatalities in the short time they've been working Casa B,very unstable ground=very high costs.

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