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.