Lake Shore Gold (LSG-T)

(A Top Pick Sept 25/16. Up 81.74%.) Acquired by Tahoe (THO-T), and he accepted the shares rather than cash.

(A Top Pick June 17/15. Up 57.14%.) Acquired by Tahoe (THO-T), which he continues to hold. There is potential for this to re-rate as investors look to this as an alternative to the senior gold producers that trade at 1.5-2X NAV, with little to no growth.

(A Top Pick March 3/15. Up 86.61%.) This was acquired by Tahoe (THO-T). His belief was that this was a company that was underappreciated because of the short mine life. (See Top Picks.)

Just take the bid. Countries that need mining are often safer than countries that are perceived as lower political risk.

It is being taken out. He thinks you will see more of this action in the sector. He would not buy today. Consider his Top Pick today in gold.

The company has done a very good job of turning around what was a troubled operation. Has always been a fan of the Northern Ontario Achaean gold deposits, this being a classic example. He is attracted to this company. His suspicion is that the technical problems which plagued the company 3-4 years ago are a thing of the past.

It has been one of the stronger stocks in the sector. It had a 50% swing in the last year. It is still up. It is probably going to run quickly.

This goes beyond the commodity. It does not hinge its return strictly on whether gold goes up or down. The operational execution has been great. Eight quarters of meeting or exceeding guidance. About 180,000 ounce producer, sub-$1,000 an ounce, which is very rare for all-in costs. This is about looking for their initial resource to come out for their 144 gap zone, which he thinks could be transformational in the 1^st half of next year. That could potentially double its resource and ultimately lead to potentially replacing its current short reserve life mine, taking it beyond 6 years to maybe 10-11 years.

Is a takeover candidate. They have increased production and lowered costs now. He is very bullish about it.

A well run company which he thinks has good resources. The real problem is gold itself. Gold really depends on inflation eating the value of your paper currency. This is just not happening. He wouldn’t be surprised if gold breaks down through $1000.

Just announced a 2^nd discovery from their 144 zone. They have certainly done well and he doesn’t see a lot of downside. Doesn’t see anything wrong with this company at all.

An operator in Timmins, with production at around 200,000 ounces a year. As they have been developing this asset, they have struggled and the free cash flow has not been there, and the balance sheet has deteriorated from 2011-2013. Management has finally turned the corner in free cash flow for 4 quarters running. Free cash flow is $40-$50 million relative to its market cap of $450 million, and that is quite material.

This is going to be a little more driven by actual catalysts like drilling. It is in kind of a steady state at about 160,000 ounces a year and a low cost producer. Very good margins. The next catalyst for this is their gap zone, which is in the vicinity of their existing complex in Timmins. Management is looking for 1 million ounces for that deposit, which could effectively double their current resource.

He would rather own a shorter mine life company that actually makes plenty of free cash flow in today’s gold environment, rather than looking at gold companies with a 10-12 year mine life, but struggling to make money. This has a 5-year mine life. Have kick started their exploration program in the Timmins area, to try and replenish what they are producing, and ideally add 2-4 years to their mine life. Right now their cash “all in” costs are just under $1000 an ounce, and they should be able to generate $50-$60 million of cash flow.

A very well operated company in a very good gold terrain.