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XMFSinchiruna (26.56)

The (New) Greatest Gold Stock in the World



August 31, 2011 – Comments (12)

It is my sincere hope that most of my regular readers will have enjoyed the sudden surge in Northgate Minerals shares as a result of AuRico Gold's all-stock friendly acquisition bid. After all, NXG was #2 on my list of top picks for 2011, was the subject of this vocal reiteration of my bullish outlook back in May, and then became my top pick as the greatest gold stock in the world following last month's announcement of the deal with Primero Mining.

I retain my strong recommendation of AuRico shares following this enormously strategic acquisition, and now look for the miner to grow into one of the top intermediate gold producers in the world. While it's still high on my list, another stock just became my new top pick for gold. 

Primero Mining is right back to where I was actively acquiring shares before the prior Northgate / Primero announcement. Only now the company has a NYSE ticker under its belt, a $25 break fee from Northgate, and a gold investment community that is now aware of the extent to which San Dimas offers a terrific springboard asset from which to launch the industry's next mid-tier rocket.

The silver-stream tax issue is an unfortunate one, but not a lasting game-changer in my opinion. They'll work it out, and at these valuations I feel the matter has been more than fully discounted. I will endeavor to acquire a more comprehensive understanding of the underlying issues beyond the somewhat vague discussions contained in company filings, and report my findings to you accordingly. 

Primero is now my #3 equity holding, though names like Brigus and Claude have also figured prominently on my buy-list lately. Anywhere under $4, they're giving Primero away, and I honestly think part of that has to do with the the market's unfamiliarity with the company and its cornerstone asset. Like Great Panther, understanding the true potential of the asset requires more than a mere peak at stated reserves. The company has now come into the spotlight, and folks will now begin to perform their DD in earnest.

Please review this analysis of Primero's founding transaction with GG (which owns a 35.5% stake in Primero):

12 Comments – Post Your Own

#1) On September 01, 2011 at 10:59 AM, Jbay76 (< 20) wrote:

Hi Chris,

When you mention a silver-stream tax, I assume your talking about Primero Mining, and was wondering if you might  expand slightly on that?  Otherwise, I'll look into their website and the link you provided when I get a chance and look forward to reading your future findings.

Many aloha's

John (jbay)

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#2) On September 01, 2011 at 11:06 AM, XMFSinchiruna (26.56) wrote:


Read their Q2 earnings release. I encourage Fools to contact their IR rep (Tamara Brown) with questions regarding the tax issue. I feel the company could do a better job explaining the issue in fuller detail, and calls from prospective or existing shareholders may prompt improved transparency regarding the underlying dynamics of the issue.

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#3) On September 01, 2011 at 11:58 AM, drdrab (< 20) wrote:

Here are a couple clips from BNN where Joe Conway talks about the tax issue and about what is next for Primero.

Hopefully the links work, if not just go to BNN.CA and search Joe Conway

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#4) On September 01, 2011 at 12:00 PM, XMFSinchiruna (26.56) wrote:

Thanks drdrab! I hadn't seen those. Much appreciated.

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#5) On September 01, 2011 at 3:15 PM, Frankydontfailme (29.47) wrote:

Did you see GPL's search results? 

Starting to feel like silver's about to pop, and take GPL for a ride. 


Unrelated (also), does anyone have a recommendation on a write-up for SVM and or AXU? Starting to do some serious DD as they seem dirt cheap. 

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#6) On September 01, 2011 at 3:43 PM, XMFSinchiruna (26.56) wrote:


It's not recent, but here's my last feature piece on Alexco

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#7) On September 01, 2011 at 3:55 PM, XMFSinchiruna (26.56) wrote:

P.S. Look who's unrepentantly spewing misinformation in the comments section here. He doesn't know the company well enough to know when Young-Davidson is slated to commence production (as clearly established by his glaring misinterpretation of a news excerpt), but of course that doesn't stop him from painting the transaction as overpriced with an unwarranted authoritative tone.

Hey Skypilot, want to take on the role of Sinchi's official GMX-fact-checker? I'll warn you ahead of time it's a thankless task involving much wasted time and frustration because it is so much less time-intensive to level baseless allegations and spew misinformation than it is to rebut them with facts and reasoned analysis.

Extra credit if you can ascertain the underlying motive.

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#8) On September 01, 2011 at 4:42 PM, BillyTG (29.45) wrote:

My 1 minute analysis on goldminingInfant's underlying motive:

1. He singles out your threads out of jealousy that he lacked the skill and talent to be the PM "guru"  here at TMF.

2. His real-life portfolio was taken to the cleaners if he sold PMs early or shorted them (never read enough of his posts to know his investing history) and spouting nonsense here is his inexplicable way of venting that frustration.

3. Perhaps, in some misguided fashion, he is altruistically (in his mind) attempting to direct others AWAY FROM PMs so that they don't get burned.

4. He displays an overall pathology of passive aggressive behavior consistent with DSM-IV standards. (Okay, I made this one up to sound fancy, but maybe it's true)

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#9) On September 01, 2011 at 4:42 PM, Option1307 (30.53) wrote:

Nice write up, thanks for sharing. +1

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#10) On September 01, 2011 at 6:06 PM, XMFSinchiruna (26.56) wrote:

I was going to post this to the comments section of the article, but I opted to restrain myself. I'll just share it with you folks instead.

Readers may wish to be informed that the above commenter proposed the following target prices for AuRico Gold's shares just over one year ago:

"Outlook: Negative. Target 2011: $2. Target 2015: $0.00 "


Offering a sliiiiightly different perspective, I selected AuRico as my #1 stock pick for 2011. The stock fetched $7.96 on the date of publication, and has since appreciated 48% in 8 months even after the recent pulllback.

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#11) On September 01, 2011 at 6:12 PM, kdakota630 (29.14) wrote:


Let's not rush to judgement just yet.  The 2011 prediction so far has proved to be a little off, but perhaps he'll do better with the 2015 one.


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#12) On September 08, 2011 at 1:39 PM, cizastro (< 20) wrote:

WTF just happened with PPP?  I had a limit order in to buy and suddenly the stock just tanked.  Nothing like getting a haircut as your order fills :-(

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