Top 10 Gold Stocks for New Money Now, Part 2http://www.fool.com/investing/general/2011/07/05/top-10-gold-stocks-for-new-money-now-part-2.aspx Christopher Barker
July 5, 2011
Amid a welcome patch of near-term weakness for gold mining and exploration stocks, this Fool recently became an active buyer in an array of gold stocks that I believe offer top-quality exposure to an anticipated resumption of the metal's multiyear bull-market blitz.
As an update to my initial top 10 picks for gold and silver in 2011, this two-part series highlights those elite gold stocks that I currently consider the most opportune vehicles for new gold investment. Accordingly, these stocks also figure prominently within my own investment allocation into precious metals, and I personally own shares of all 10 selections. Part 1 of this series highlighted selections 6 through 10 from my golden list, while my top five picks are featured below:
5. Chesapeake Gold (OTC BB: CHPGF)
A recently updated preliminary economic assessment assigned the project a net present value of $2.9 billion (5% discount rate) assuming an immensely conservative gold price of $900 per ounce. The plan envisions annual production greater than 1.1 million gold-equivalent ounces over a 20-year mine life. Although construction will be capital intensive with a price tag of $3.16 billion, it could take only four years to recoup that cost. Mackie Research maintains a 12-month price target of nearly $39 for the stock, which implies multibagger upside potential from Tuesday's $11.50 share price.
4. Northgate Minerals (AMEX: NXG )
If Young-Davidson were Northgate's sole asset, these shares would still be undervalued here at about $2.60 per share. With a preliminary assessment looming for the reworked Kemess Underground project, a new drill program at the Awakening Gold project in Nevada, and two operating gold mines in Australia, Northgate figures among the clearest bargains in the gold patch.
3. AuRico Gold (NYSE: AUQ )
I have highlighted AuRico's pattern of consistent exploration success as a cornerstone of the company's attractiveness, and recent drill results from both Ocampo and El Chanate punctuate the miner's organic growth potential. At Ocampo, AuRico encountered an extremely high grade of 12.36 gold-equivalent ounces (GEOs) across 26.8 meters within the Picacho open pit. With a pending preliminary study of the Guadalupe y Calvo deposit, a fruitful exploration campaign, and continued optimization of operations, I continue to perceive multiple catalysts to sustain AuRico's growth momentum.
2. Primero Mining (OTC BB: MNOCF)