GOLD STOCKS NEWS – Gold stocks were mixed Tuesday morning as the Market Vectors Gold Miners ETF (GDX) inched lower by $0.19, or 0.3%, to $60.98 per share. Gold stocks and the GDX held steady as COMEX gold futures rebounded from earlier losses to trade higher by $6.80 at $1,785.20 per ounce. While the GDX posted a fractional loss, the S&P/TSX Global Gold Index – Canada’s leading gold stocks composite – advanced 0.7% to 427.59.
Notable gold stocks posting gains this morning included Barrick Gold (ABX) and Gold Fields (GFI), which rose 0.3% and 0.2%, respectively. On the downside, Kinross Gold (KGC) fell 0.6% and Newmont Mining (NEM) dipped 0.3%.
In spite of today’s stability in gold stocks, the GDX has continued to substantially lag the yellow metal in 2011 – with a 1.1% loss compared to a 25.6% gain on a year-to-date basis. The individual gold stocks comprising the GDX – primarily large-cap gold producers – have as a group failed to provide investors with the gold price leverage exhibited during prior bull markets in precious metals.
As a result of the underperformance of large-cap gold stocks, several market strategists have turned their attention to the sector’s small- and mid-cap names. In a report published this morning, analysts led by Michael Gray at Macquarie Capital Markets Canada Ltd. reiterated the firm’s Outperform rating and raised its target price on a number of emerging gold exploration companies.
Macquarie lifted its price target on Eastmain Resources (ER.TSX) to C$2.75 from C$2.25, on Extorre Gold Mines (XG.TSX, AMEX: XG) to C$12.50 from C$12.00, on Tahoe Resources (THO.TSX) to C$26.00 from C$23.00, and on Rainy River Resources (RR.TSX) to C$9.00 from C$8.75 per share. Amongst the explorers it covers, Macquarie highlighted Midas Gold (MAX.TSX) and Eastmain Resources as its “Top Picks.”
Looking ahead, the firm predicted that merger and acquisition (M&A) activity in the gold stocks sector is likely to increase considerably. “The difficult equity raising climate for the juniors has led to deals to consolidate various asset interests and to acquire assets that junior exploration teams may not be able to finance and build,” Macquarie wrote. “There is also a trend towards small opportunistic acquisitions given the large cash positions held by the seniors and a number of mid-tier precious metal producers.”
The firm highlighted Extorre Gold Mines, ATAC Resources (ATC.TSXV), and Mirasol Resources (MRZ.TSXV) as its “Top names for potential M&A activity.”
Spanish Mountain Gold Delivers Updated Resource Estimate
The Company expects the ongoing Prefeasibility Study for the Project to be completed in April 2012. Spanish Mountain Gold also intends to have the in-fill drilling and an updated resource estimate completed in April 2012, at which time it intends to commence a Feasibility Study for the Project. Full Spanish Mountain Gold News Release.
- A significant increase in Inferred resource has occurred within the North Zone.
- There are clearly defined areas for future in-fill drilling to aid in re-classification of inferred ounces within the resource.
- Mine planning for extraction of higher grade near-surface gold mineralization within potential starter pits will be optimized during the pre-feasibility study.
