Augusta Gold (G.TO)

New CEO has replaced about two thirds of the operating management at mines. He is trying to cut $250 million out of the cost base. This has been a big, big laggard in gold companies. Dividend yield of 0.53%.

Although gold has dropped because of the irresponsibility of the central banks, he remains very positive on gold. He would use the opportunity of the weakness in gold prices to buy more.

It had a tough year, lagging the gold index and its two big peers. It was the growth story. Earlier this year they announced a new CEO. It is a second half story. They bit the bullet and changed things around and production was a little weaker, but management has kept the same guidance so it should be a strong second half of the year. The Mexican trucking issue is not an issue in his mind unless they can’t get in for two weeks.

The case is stronger than it has been for some time. You can’t argue against this given negative interest rates. Production has declined over the last few years. This is one he would buy. It has not rallied with the group. It has room for improvement as well as upside.

A great company, but with a lot of these larger companies the issue becomes how do you grow. He would prefer to be in mid-cap names where you will get a lot more leverage.

You have to look at this on the basis of are we in a bull market for gold. This company has had a little bit of digestive problems on some of the operation side, and it has lagged the rest of the sector. If you like the outlook for gold, this company is fine to own.

It is tough to see who would take them out. It is a big company. It has sold off and underperformed the peer group this year. He actually likes this company and thinks it is a time to step in. The worst is behind them. Production problems are solved. He thinks they will turn it around.

There is a 25% potential increase in the absence of gold even doing anything. Management has taken on the challenges head-on, addressing some of the issues with their operations. They have 4 mines in Canada, 2 in Mexico and a few more in Central and South America, all jurisdictions that are safe.

If you are looking very, very carefully at your capital, you might look at an Agnico-Eagle (AEM-T) for its past record which has tended to be better than the other big ones.

Set of three THEME picks: Between now and a year from now, the Fed will support the US until the election. He thinks they will not follow Japan and buy up half the S&P 500. The Fed wants to raise interest rates. When we get past the election he thinks the Fed will become more realistic and interest rates will start heading up. C-N happens to be very, very cheap. G-T has probably been one of the poorer performing gold stocks. It is just a nice cheap income stock. Telus is a nice income stock. Things are going well for the company.

Thinks most of the bad news is out on this company. You get a new CEO in here and he does the right thing and writes down everything he possibly can. Normally you get a bunch of bad news when the CEO changes, and that happened. Maybe there is more bad news to come out, but if the gold price goes higher, than this one goes much higher.

This is doing okay, but is not doing as well as other gold stocks, and significantly underperformed them during the last month. There are other gold stocks which seem to be performing better. Chart shows it is still in an upward trend and has formed a nice little channel, so it looks very interesting. Most of the Canadian medium and large gold stocks have moved above their recent highs, but this one has not done that.

(Market Call Minute.) He would buy this, but would wait until they report tomorrow.

The one gold company he owns, and has been disappointed in how they have treated their dividend policy, especially the most recent dividend cut under the new CEO. He is now searching for why he is owning the stock with a less than 1% dividend yield.

He doesn’t have big expectations on any of the gold stocks. They have been doing a pretty good job of bringing their costs down, particularly in Mexico. But have a higher valuation than most. For a while it was the quality “go to” senior, and Barrick seems to have got back a little of that this year. Not the time to add, and he would more likely be getting out of it.