Junior miners and explorers all but fell by the wayside following the subprime mortgage crisis and the ensuing equity pullback. But now that investors have had their smelling salts, they're ready to wake up to reality: These companies belong to a legitimate investment class, and some of them have potentially lucrative prospects.
While fiscal fourth-quarter and full-year 2009 financial results most likely won't be available for a few weeks, Northgate earlier this week announced robust production highlights in terms of gold extraction, which totaled 81,098 ounces, at an estimated average cost of $529 per ounce, which is relatively high compared with that achieved at operations like Aurizon Mines'
Room for improvement
So right off the bat, there's at least one area for Northgate to work on, but in terms of readiness, few companies are more prepared than Northgate to take advantage of attractive investment opportunities.
It had nearly $236 million in cash on hand at the end of the last quarter, and that isn't $236 million on the books of a monster such as BHP Billiton
Cash to burn
Additionally, Northgate has very little debt, so it's feasible that virtually all of that money can go directly toward growth, either internally, or through expansion. On its website, it details exactly what its "want ad" for a potential investment looks like:
- Late stage exploration development property.
- Politically stable jurisdiction.
- Gold as primary metal.
- Acquisition at a reasonable price.
- Project diversification.
With those guidelines and its mountain of cash, investors' minds can simply reel at the number of possible consolidation, joint venture, and outright acquisition prospects.
Without being overly speculative, it's this Fool's honest opinion that at the very least -- whether organically or through business investments -- Northgate is bound to grow, and at the very least, it deserves a spot on investors' watch lists.
Take the Motley Poll then sound off in the comments section lower on the page about miners, or celebrities, or whatever's on your mind.
Try any of our Foolish newsletters today, free for 30 days.
Fool contributor Chris Jones is long shares of Taseko Mines, but he doesn't own any other company mentioned in this article, nor is he short anything. The Motley Fool's disclosure policy got into a card game in a company town, caught a miner cheating, and hilarity ensued.