GOLD STOCKS NEWS – Gold stocks climbed Tuesday as the Market Vectors Gold Miners ETF (GDX) advanced $1.12, or 2.1%, to $54.77 per share in morning trading. Strength in gold stocks and the GDX was fueled by a surge in COMEX gold futures, which rose $29.90 to $1,638.00 per ounce amid a broad-based rally on Wall Street. Gold stocks in Canada moved higher alongside the GDX, as the S&P/TSX Global Gold Index added 1.6% to 382.93.
Many gold stocks have already been in the news this week, with several mining companies included in the GDX reporting fourth quarter 2011 production results and 2012 forecasts. Notable gold stocks have included Alamos Gold (AGI.TSX), Eldorado Gold (ELD.TSX, NYSE: EGO), Goldcorp (GG), and Minefinders (MFL.TSX, AMEX: MFN). Following the reports, a slew of Wall Street analysts published commentaries and/or adjusted their ratings and price targets on the various gold stocks.
Alamos Gold announced a 60% sequential increase in quarterly production to 46,500 ounces and issued 2012 guidance of 200,000-220,000 ounces. Scotia Capital analyst Trevor Turnbull commented that “We anticipated a strong finish to 2011, and Alamos delivered by beating our forecast with greater throughput and 5% more gold output.” Turnbull also reiterated his Sector Outperform rating and C$25.00 target on AGI.TSX, which in Tuesday morning trading rose 1.2% to C$17.54 per share.
Eldorado Gold reported quarterly production of 168,993 ounces and 2012 guidance of 730,000-775,000 ounces. Dundee Securities analyst Paul Burchell commented that “The operational results were in line with both the company’s latest guidance and our forecasts.” However, given the substantial sell-off in shares of ELD.TSX in recent months, Burchell upgraded Eldorado to Buy from Neutral but lowered his target to C$20.00 from C$21.00. This morning, ELD.TSX advanced 1.7% to C$15.04 per share.
Goldcorp – the second largest member of the gold stocks sector in terms of market capitalization – announced Q4 production of 687,000 and forecasted 2012 production of 2.6 million. CIBC analyst Barry Cooper wrote in a note to clients that the figures “were essentially in line with our expectations.” Cooper went on to say that following the report, “Investors should feel more comfortable with a holding in this name and it remains our top pick amongst the senior producers.” As such, Cooper reiterated his Sector Outperform rating and $73.00 target on GG, which on Tuesday climbed 1.8% to $45.54 per share.
Lastly, Minefinders reported Q4 production of 37,541 gold equivalent ounces. TD Securities analyst Steven Green noted that the figure was above his estimate of 34,083 ounces. Furthermore, Green stated that “Minefinders’ share price has come off nearly 30% since November when it announced a construction decision on a mill without a well-defined plan or resource, which created some uncertainty in the market…We believe the stock is now appropriately valued due to share price depreciation, especially following this quarter’s results, which improved after a couple of bumpy quarters.” As a result, Green upgraded Minefinders to Hold from Reduce but maintained a C$14.00 target price. In Tuesday morning trading, MFL.TSX rose 1.5% to C$11.76 per share.
Crocodile Gold Seeking Improved Offer from Luxor Group
Crocodile Gold also noted that its Board of Directors is considering other strategic alternatives available to the Company. As a result, Crocodile mailed a Directors’ Circular to its shareholders requesting that they defer making a decision on tendering their shares to the Luxor offer until there is additional communication from the Board in a supplemental circular – which will be sent to shareholders at least seven days before the scheduled expiry date of the Luxor offer, January 30, 2012. At this time Crocodile Gold advised its shareholders to take no action in response to the Luxor offer. Full Crocodile Gold News Release.
- Luxor’s offer of C$0.56 per share represents a 60% premium to the December 13, 2011 closing price of CRK.TSX – the day prior to the announcement of the bid
- Crocodile Gold has established a special committee of independent directors to consider whether the offer is in the best interest of the Company's shareholders and whether it represents fair value
- The Board of Directors stated that it “does not believe it is in a position to make a recommendation with respect to the Luxor Offer until the negotiations have been terminated or concluded and the Special Committee and Board of Directors have assessed the Luxor Offer, as it may have been amended or varied as a result of the negotiations”