Welcome To Aurania Resources
Message: Reason for uptick today....
Last year we added a separate portfolio to The Casey Report called Interesting Speculations.
Doug Casey and I (E.B.) both believe that to be successful in the market, you have to separate investments from speculations.
Of course, speculating is exciting. Watching a stock run from under a dollar to several dollars is thrilling. We’ve personally seen it happen to our holdings too many times to count.
What most people struggle to learn is these speculations deserve proportionally less hard-earned capital than larger, more stable investments. Once you get this “position sizing” right, you’ll find speculations can create new capital to bolster your investments.
That’s why we separated our speculative picks in an entirely different portfolio.
Today we’re adding two new names to that portfolio. We’re also giving you a second chance to pick up shares of a small Nevada gold producer that’s up 24% since we first recommended it… as well as one of our most timely speculations—our main “lost gold” pick which has massive upside potential right now.
First, let’s get to the new names…
Now’s a great opportunity to pick up shares of Leagold Mining (LMC.TOin Canada or LMCNF in the U.S.).
While the company is a respected major operator today, last decade it was a junior growing into a major through acquisitions.
Good acquisitions add value to existing shareholders. Most companies with a track record of good buying have good buyers running the company. That was the case with one of our current picks, Fiore Gold, which we’ll update you on in a second. It is also the case with Leagold.
Leagold bought its flagship asset, the Los Filos Mine, from gold producer Goldcorp last year. On the company’s last update, it was on track to produce around 190,000 ounces of gold in 2017. The best part… Leagold actually makes money on the ounces it produces, spending around $900/oz. on production expenses.
You might wonder why Goldcorp would sell an asset like this. After all,Leagold on its own justifies twice its current market cap.
Goldcorp has a history of spinning out assets and keeping shares while the new company grows. It’s been extremely lucrative for the company.
Take for example its C$1 billion payday after selling Escobal (a silver mine in Guatemala) to Tahoe Resources in 2010 for C$230 million and a 40% stake in Tahoe shares. In 2015, it sold the remainder of its shares for C$1 billion.
Goldcorp might be thinking the same thing with its 23% stake in Leagold. If so, we want to move on Leagold shares before the company’s experienced mergers and acquisitions team goes to work building it into North America’s next major gold mining firm.
BUY shares of Leagold Mining (LMC.TO) up to C$7.50 or (LMCNF) up to US$6.
We’re also adding shares of Lundin Gold (LUG.TO in Canada or FTMNF in the U.S.) to the portfolio. The company has an interesting tie to another of our most timely speculations, Aurania Resources. More on that firm in a moment.
Lundin is about to go into production at its Fruta Del Norte gold mine in Ecuador. With 4.83 million ounces of gold and 6.34 million ounces of silver, slated mine production is 340,000 gold ounces per year for at least 15 years.
We’re buying Lundin shares now because the company expects to spend just a touch more than $600 per ounce producing all of that gold. That’s an all-in cost number, too, including every expense down to closing the mine in 2034, or hopefully later. There’s a chance the company will be able to expand the mine’s life with additional drilling in years to come.
Investors go crazy looking for the next great gold discovery. After the stock runs higher overnight, the hard work of actually building the mine begins. Over those years, investors forget about the company.
In this case, that’s our window to buy.
BUY shares of Lundin Gold (LUG.TO) up to C$9 or (FTMNF) up to US$7.25.
We think these two names are great speculative bets. As a reminder, these are smaller stocks and are very volatile. Don’t bet more money than you can afford. As we told you, it only takes a little bit to make a fortune if we’re right.
Next, we have some important updates on two of our current gold Interesting Speculations…
You see, when one of our picks starts to take off, we look closely to see why. In this case, things are just starting to gel for the team behind Fiore Gold (F.V in Canada or FIOGF in the U.S.) If you didn’t look into shares when we first recommended them in our October issue, you might want to now.
We’re raising our buy-up-to price on Fiore shares to C$4 (US$3.20).
We recommended Fiore shares at C$0.71 (US$0.55). We liked the company’s three-pronged approach to the gold business. First, it bought the Nevada-based Pan Mine for pennies on the dollar after its previous operators ran it into bankruptcy. Second, it will use profits from Pan to drill exploration assets also in Nevada, most interestingly, its Gold Rock asset.
The company’s third focus is the one that could be its most lucrative feature over time. It intends to acquire other small, Nevada-based gold producers hoping to build a larger, consolidated company. Its leadership did that before, and we think it will do it again.
BUY shares of Fiore Gold (F.V) up to C$4 or (FIOGF) up to US$3.20.
One of our most timely speculations right now is Aurania Resources (ARU.V in Canada or AUIAF in the U.S.).
The team behind Aurania found Lundin Gold’s Fruta Del Norte last decade. They’re on the hunt again in Ecuador. This time, they’ve turned to 17th-century maps and detailed information held at The Vatican for clues.
I met with the man credited with the Fruta discovery, Keith Barron, a month ago in London.
E.B. in London with Keith Barron
In March of last year, we added Aurania to our Interesting Speculations portfolio. Shares were C$2.45. They were not yet available on the U.S. exchange. Today they are available.
The stock fell towards the end of last year on tax-related selling. Keith told me, “Hang in there,” as it hit a low of C$1.60 the week before we met.
Shares have doubled since our meeting. More importantly, the full potential of a lost city of gold discovery is coming to light. That’s why we’re raising our buy-up-to price.
BUY shares of Aurania Resources (ARU.V) up to C$15 or (AUIAF) up to US$12.
Our buy-up-to targets are much higher than the current share price. Here’s why:
Aurania is over 70% controlled by the man pictured with me above and other insiders. He’s found a billion-dollar mine before in the same region. He thinks he can do it again. For that reason, he’s not letting go of shares unnecessarily.
Certainly, the company will need more money. And over time, it might have the need for other help on a corporate level. But Keith is looking for the big score. He doesn’t need a paycheck like many careless mining company managers.
With less than 23 million shares outstanding, if Aurania hits the mother lode in Ecuador, its shares will explode.
Editor, The Casey Report
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