Torex Gold Resources (TXG-T)

This name is further down the food chain. Take a look at the more interesting mid-size players. Still, he's been lightening up on gold. With a strong USD, and interest rates possibly being higher, gold may take a few steps back. So he's waiting to see how things shake out.

Expecting further gains from gold. Gold stocks have not followed run up in gold, which presents buying opportunity. Discount to net asset value, and low cash flow multiple good for margin of safety investors. Mines located in Mexico have a lot of opportunity - lots of gold to produce. Expecting to maintain ~450,000 ounces of gold production going forward. 

At 5X earnings, TXG is very cheap indeed. While it is down 7% in 2023, it is still up 55% over 52 weeks, so may just be consolidating prior gains. Revenue is ramping nicely; EPS is being impacted by inflation and other factors and is expected to decline in 2024. The last quarter was ahead of estimates, but estimates have been ticking down. It has $320M net cash so is in excellent financial shape. Cash flow generation is good. We think it is certainly attractive on valuation, and its cash helps provide some comfort. We would see it as buyable. 
Unlock Premium - Try 5i Free

One mine is winding down, but another is ramping up production. Well funded, cash on the balance sheet. No debt. Trading at 3-4x operating cashflow. He took profits when it ran up.

Some of their Mexico properties have geo-politcal risk, though he likes Mexico as a whole to mine. They have cash and are getting this Mexico mine into production. They just had an EPS miss. This could be a buying opportunity.

Great deposit. Had some start-up issues but solved them. Issues now with safety and work blockages in Guerrero, Mexico, which is a tough place. Things they can't control are killing them.