Argonaut Gold (AR.TO)

He sees this as fairly good implementers, but doesn’t see any catalyst other than the gold price to take the stock higher. They have certainly had successes in their past life. He wouldn’t be in the mood to buy this one today.

Like all gold stocks, this has been absolutely pummeled. Gold stocks are very undervalued relative to gold bullion. This stock is in a base pattern. From a seasonal perspective, we are coming up to the end of the gold period for stocks, September 25. Gold and gold stocks have a historic pattern of underperforming in October.

Had a miss in a quarter which was weather related about a year ago. The stock is cheap, but it has never really recovered. Their cash costs are around $750 an ounce and they’re all in costs are around $1000-$1050. The balance sheet is fine, but they have to spend money on the growth. It is trading something like $0.40 on the dollar on asset value, so it is stupidly cheap. You should probably do something senior 1^st, and once that has moved, then you could go and look at this one.

(A Top Pick July 21/14. Down 71.05%.) Missed one quarter about a year ago because of heavy rains in the rainy season in Mexico. Made it up the next quarter and has reported good results ever since with a bunch of new drilling, but nobody cares. It was a mistake to pick a gold a year ago.

Chart shows lows in mid-2013, mid-2014 and late 2014-early 2015. This was a good day for gold and this company did not participate. A relative under performer.

(A Top Pick May 30/14. Down 56.22%.) This has the value driver that he focuses the most on, free cash flow from the El Castile and La Colorada mines in Mexico. A significant portion of their value lies in 3 development assets, which were going to get funded out of the free cash flow from Mexico. At the current gold price, their ability to fund those assets is now called into question. Because of this, investors have exited. He sees value here, and if his gold price forecasting comes to pass this company can regain its lost performance.

(Market Call Minute.) Was a Mexican producer primarily, but has a mine in Ontario. He has found better places to be.

Its gold mines are all in Mexico. Had a rainy season last fall and missed a quarter, the stock got hit and never really recovered. Hasn’t added to his holdings, but given the small amount of holding and the price that it is at, he has left it. If his outlook for gold got better, he would probably add to it. This has everything you would look for in a gold mine with $700 costs, growing production, cash flow and a good balance sheet.

Had been buying before Christmas when it dipped on tax loss selling. Just reported a record 4^th quarter production. Still cheap at under $3. Given that the outlook in gold has changed so much, you should see NAV’s in the $5.50-$6 range. He thinks the stock is worth $4 in the current environment. They are quite profitable at the current gold price level.

With gold prices weak, it is hard for the stocks to do very well. Has been picking away at this one recently when it gets around $4. Production costs are under $700. They have a couple of good quarters coming. The short-term strength in the US$ and the lack of inflation, just doesn’t bode well for a 4-6 week outlook on gold. If you are either a gold bug or have patience, this would be a Buy.

Started to buy this again recently. Just reported production, which was about a 7% miss, so the stock has pulled back. Currently trading $0.65 from its NAV. There is production growth coming. This was just a quarter that got pushed into the back half of the year, so they kept guidance the same. Thinks it is easy for this to go to $5 again. This is a seasonally strong period for gold (and silver), so he thinks there is at least a trade in this. Low cost producer at about $700 an ounce.

Midsize gold producer in Mexico. 2 primary assets. Had a bit of recovery issue in one of their mines in the 4^th quarter where it was chemically difficult to separate the gold from the ore. This resulted in lower-than-expected production, and lower than expected cash flow. That will change as we go through 2014 towards the back half of the year. Expects to see the mine moving to a better area, and production come back up. Feels the share price slide was unjustified. Fundamental value is north of $4.

This is his only gold holding and is only a 1% holding in clients’ portfolios. Lost a court case recently on one of their Mexican mines. Still thinks they are going to get it, but it is a 6-9 month delay. That impacted the stock a little. Not hugely positive on gold, but wants to have a little bit of insurance. There is a fair amount of production growth coming over the next 3-4 years at costs of around $700 an ounce. That is still attractive.

Gold is an industry he does not like. You are always battling two huge forces you can’t predict.

Q4 results came in reasonably good although there are a couple of questions that he still has. Cash costs came in lower, but they burned quite a bit of cash in the quarter. Their $125 million cash in the last quarter has been reduced to $80 million. There are some payments to Silver Standard (SSO-T) for assets they bought. Finds it expensive.