The next big gold discovery. A catchy line considering that the world’s easy-to-mine, high grade gold is already gone or spoken for.
Because most of the high grade deposits around the world are being exhausted, investors are now looking toward finding companies with the biggest chances of new gold discoveries. In the world of resource investments, nothing has the ability to generate multi-baggers better than new discoveries. Whether its gold, silver, uranium, or oil and gas, new discoveries are what drives the market wild.
In 2010, companies making new discoveries saw the biggest climb in their share prices. That is why our goal for this year (see The Future Ahead) was to identify companies that offer above-average opportunity based on successful project advancement and development.
Companies that not only have proven resources, but have the potential for new exploration discoveries is ideal because it provides a valuation based on ounces in the ground, but also provides significant upside potential from exploration discoveries and resource upgrades.
A lot of companies made big discoveries last year all over the world.
Canaco Resources (TSX VENTURE: CAN) jumped from as low as $0.36 per share last year to over $6 per share, after making new discoveries in Africa. While African mining plays were “hot” on discoveries, it was the “cold” that garnered the most attention.
Yukon and Alaska
Unless you have been hiding under a rock last year, there’s no doubt you have heard of the big discoveries in both the Yukon and Alaska. Some of these discoveries helped skyrocket the shares of many juniors to market caps that rival even current producers…all without a resource calculation.
For example, ATAC Resources (TSX VENTURE: ATC) climbed from $1.19 to as high as $9 last year, with a current market cap of over $609 million. Kaminak Gold (TSX VENTURE: KAM) climbed from lows of $0.70 to as high as $3.85 last year, with a current market cap of over $209 million.
While the share prices of those exploring in both the Yukon and Alaska have declined over the last few months, things will begin to heat up soon as the drills begin to turn again (it’s too cold to drill in the winter.) You can bet that companies with a good asset base exploring in these regions will have an aggressive drill program this year.
Last year, an estimated $140 million was spent on exploration in the Yukon alone. This year, that number is set to double. The Yukon Geological Survey estimates almost $330 million will be spent for work programs and drilling this summer. With the discoveries made using only $140 million last year, imagine what $330 million will turn up this year? That’s not including the drill programs planned in Alaska.
Both the Yukon and Alaska have some of the biggest gold-bearing systems in the world. The Yukon overall has the biggest placer gold signatures in the world, while Alaska is host to one of the largest copper-gold porphyry systems in the world, the Pebble Deposit currently worked on by Northern Dynasty Minerals (TSX: NDM) (AMEX: NAK) and Anglo American plc (OTCPK: AAUKF)(LSE: AAL).
While the rest of the world is depleted of large gold and mineral assets, the prospects in the Yukon and Alaska are just beginning.
The big players in the industry are beginning to see that Yukon and Alaska are not just area plays, but big district opportunities. We already saw this last year when Kinross Gold (TSX: K) (NYSE: KGC) bought out Underworld Resources (see news release.)
Over the next few years, we’re going to see a lot more action for takeovers in these areas. That is why every junior needs to be drilling. If a company is not spending boat loads of money on drilling this year, they better be spending it on building a mine.
If you’re going to play the Yukon/Alaskan boom, you need to find companies with clearly defined, high priority targets that already have plans to be drilled aggressively. I am not talking about a few thousand-metre drill program; I am talking tens of thousands.
As we mentioned earlier, a focus on companies that not only have proven resources, but still have the potential for new exploration discoveries is what we’re looking for, especially in the Yukon and Alaska.
Alaska and Yukon are not just a good jurisdictions – they are some of the world’s best. They have a very stable political climate, with pro-mining citizens. Other variables, like good roads and energy infrastructure, add to its positive attributes. These places have a lot of room for exploration and the next biggest gold discoveries will very likely involve them. The prospects are wide open. It’s very likely we will see some gold discoveries this year – especially with the aggressive drill programs.
The renewed Yukon/Alaskan gold rush will provide a series of great opportunities for new major discoveries and fortunes in the next several years. Wise investors who take positions now in the right Yukon/Alaskan gold stocks will be poised to benefit the most as the amazing stories unfold.
The big question is: who will have the next big gold discovery?
Right now we’re exploring a few opportunities in the sector that have yet to break out. The companies we are currently looking at not only have millions of ounces of 43-101 gold, but also have some very aggressive drilling programs planned this year focused clearly on exploration – that means a much better chance of a new discovery.
Not only that, one of these companies have analyst price targets almost double where they are trading at today.
Once we get a better idea of their work programs this coming week, we’ll let you know. Until then, enjoy the long weekend.
Until next week,
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Cautionary Note to U.S. Investors Concerning Estimates of Inferred Resources
This presentation uses the term “Inferred Resources”. U.S. investors are advised that while this term is recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize it. “Inferred Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of “Inferred Resources” may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an “Inferred Mineral Resource” exists, or is economically or legally mineable.
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