Torex Gold Resources (TXG-T)

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.

He loves their asset. Open pit in Mexico. It is extremely cheap on a valuation basis. Striking workers blocked the entrance to the mine, shutting it down. They have quite a bit of debt. You want to manage your risk by having it as part of a larger basket of these equities.

(Top Pick Jul 12/16, Down 22.42%) They are in Mexico and are a low cost producer. They have higher grade material they have discovered that won’t come on stream for a couple of quarters. They showed an earnings miss a couple of quarters ago and it makes this a great entry point. This is his only gold holding.

With this, you expose yourself to certain risks, but you are exposing yourself to a very big system.

He tends not to buy a company that is building a mine, but he bought this one because they were close enough to the end and he didn’t expect any CapX surprises. This has a great little asset, a nice simple operation. A low cost operation which generates very strong margins in this kind of environment.

A new emerging gold producer in Mexico. Trading at 7X cash flow and 1.1X NAV. Those are bottom end of the range multiples, and he expects that to re-rate as they develop their mine, which is ramping up right now.

If looking to get into gold, this is a problem because everything has moved a fair bit. This company just declared commercial production at the ELG mine in Mexico. It is roughly 200,000 ounces at a cost of about $5.35. It goes to 350,000 ounces next year and the costs go down. It is the re-rating that he finds really attractive. Although it was moving up, it was lagging the group. It also did a 1 for 10 consolidation last week, which makes it more institutional. Thinks this could see $35 in one year.

Recently announced a 10 for 1 consolidation. This is simply a way of getting the share price higher than what it was. This is a way of attracting long-term institutional investors.

A new gold producer with a brand-new mine in Mexico. He is impressed that they are ahead of schedule. A nice simple operation and should do about 300,000 ounces this year, so free cash flow positive. Their goal is to be 400,000 ounces next year. Recently added to his holdings.