AuRico Gold Inc (AUQ-T)

In the midst of merging with Alamos Gold (AGI-T). It has been a troubled mine developer and a good example of why he doesn’t invest in mine developers. The balance sheet just deteriorates and they had to cut their dividend. Alamos brings a strong balance sheet and the ability to take Young-Davidson mine over the finish line and fully develop it. They will continue to drain cash out of the company as that asset ramps up. Doesn’t see a whole lot of free cash flow coming out of the company in 2016-2017, which is the main reason he is not there.

(See comments under Gold.) The only problem he has with this is that it may be a sector laggard. He would prefer gold stocks that are out performers in the sector. He wouldn’t add to this one, but would pick another stock instead.

One of the most impressive underground mines he has ever been to. Have haulage systems, automation, which is incredible. Was skeptical last year they would be able to get tonnage up to their target. They have beaten all their target levels. Doing a really good job. Underground reserve grade is about 2.7 grams per ton, which for an open pit would be spectacular, so this is one of the lower grades for an underground mine.

Paid a lot of money in terms of dividends when they sold one of their Mexican projects recently. Their marquee asset is now the Young-Davidson mine and is one of the best underground mines that he has seen developed in the last decade. He is a bit cautious on the grade which is about 2.74 g per ton, which is fairly low grade for an underground mine. Wants to watch how they ramp up production before getting back in. When a mistake is made or there is a problem, high grades will cover mistakes whereas low grades margins are already potentially tight.

Gold is a trade right now. Likes this one and would recommend it, although these are not cheap any more.

Predominantly in Ontario. Have a Mexican asset. A lot of the cash flow has to get re-invested to ramp up project in Ontario. He has bought it on weakness in the past.

Have done a pretty good job. Instituted a dividend. Mining from underground and testing new equipment over the next 6 months. He prefers to keep a watch at this time. Buy below $3.50

Likes the range of assets.

Likes this but doesn’t own. Sees many, many names in the gold space that are cheaper.

Had been Short this because he thought they were going to have a capital shortfall in the summer. However, they were able to sell an asset so the stock had a nice rebound. Looks pretty attractive here.

(Market Call Minute.) Have recently had a few production issues. Valuation is fair.