Stockchase Opinions

Rick Rule Endeavour Mining Capital EDV-T PAST TOP PICK May 25, 2022

(A Top Pick Feb 28/22, Down 11%) Spectacular job consolidating and implementing. Loves the baked-in production growth for 2-5 years. Canadians can be proud of how it's put technology to work.
$29.350

Stock price when the opinion was issued

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DON'T BUY

West Africa mining - strong management team. Ramping up from 500k oz to 800k oz. 7 times cash flow. He sees it trading above its fundamental value. Free cash flow will be negligible for the next couple of years as they build two new mines and they have quite a bit of debt.

DON'T BUY

It has done pretty well but it has a debt load. He doesn’t like it at this point. It has had its day, moved up a lot. If he owned it, he would be looking to sell it.

BUY

If he was going to buy a silver producer, this would be it. The best of the Canadian producers. His preference is Wheaton Precious Metals as a royalty play.

COMMENT

Doesn't follow this one closely, so he has no useful insights. But he does follow EDR, a smaller cap silver company, which looks interesting.

DON'T BUY
Pretty good valuation characteristics. Trades at 8x price to free cashflow. Net debt is fine. Recently completed an acquisition. Problem is that gold does better during deflation rather than inflation. We have seen some sell offs in the sector. Poorer price momentum.
BUY ON WEAKNESS

Precious metals is an area of long term opportunities. We saw a great run for a couple years but in the last year, it has gone sideways to down. Enthusiasm has waned and is affected by the bitcoin craze. If Bitcoin loses sails, the inflation hedge money will come back to precious metals. Outlook for gold is good in the next years with governments adding debt. Trading at a low valuation. Has a compelling free cashflow. There is political risk however. Will perform better once gold picks up.

TOP PICK
West African Gold. Cheap on free cash flow basis and getting cheaper. Very good team and plate of development projects. Could be acquired. Political risk in Africa holds it back. 14 Buys 1 Hold, 1 Sell. (Analysts’ price target is $41.57)
PAST TOP PICK
(A Top Pick Feb 28/22, Up 8%)

Very good at business execution.
Africa assets include political instability.
Large deposits very attractive.
Historically very good at M&A activity. 
Will continue to own shares. 

HOLD

Owns shares in company. Troubled by CEO replacement, however assets in West Ghana are valuable. Will continue to hold. Has lots of value in company.