Wednesday June 27, 2012
by Adrian Day, editor Global AnalystSeveral of our junior gold stocks have bounced off their recent lows, but remain very inexpensive, and undervalued relative to their assets.
Vista Gold (
VGZ) is very inexpensive on resources in the ground.
The stock currently trades at less than $30 per proven and probable ounce, versus well over $200 for most similar companies.
The challenge is how to unlock the value, and raise the large amounts of cash necessary to push projects forward in the absence of property deals.
The Midas transaction was an excellent example of unlocking value. Though the shares have slipped significantly this year, Vista’s shares in Midas are still worth around $110 million.
With $15 million in cash, that means Vista’s projects are valued at only $90 million. Its Mount Todd, Australia project alone is worth a multiple of that; an updated feasibility is expected by the end of summer.
A couple of weeks back, when Vista was trading at $2.61, I described as “ludicrously inexpensive”. After a near-20% jump, it’s just plain inexpensive! We are a buyer here, but would look for pullbacks (to $2.90 or less) to add to positions.
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