Thursday, May 5, 2011
The Most Important Gold Stocks to Watch
The exploration season for gold hunters is quite short in the Yukon.
By Greg McCoach
The region's northern latitude means exploration teams can only work from about April until September before sub-freezing temperatures chase them out.
The first true gold rush of the 21st century is unfolding right before our very eyes.
After more than a century, the legendary gold history and wealth of Canada’s Yukon Territory is again making the region one of the industry's most intriguing areas for exploration.
But there's a bit of a catch...
Explorers can't penetrate frozen ground with their drills; and with no exploration progress, companies working in the Yukon tend to sag during the winter months.
But once the drills start turning, things change...
And with brand-new gold discoveries made during summers of 2009 and 2010, the appetite for quality Yukon gold stocks is near veracious right now.
In a typical year, only about $20 million is spent exploring for gold in the Yukon. Now that the price of gold is breaking record highs, about $100 million is spent in an average year.
But in 2011, the Yukon Geological Survey estimates almost $350 million will be spent for work programs and drilling this summer in the Yukon.
In the past month alone, tens of millions of dollars have been raised at the last minute to finance exploration projects in the Yukon.
Selwyn Resources (TSX-V: SWN) announced an equity financing of up to $15.0 million, and Colorado Resources (TSX-V: CXO) increased their bought deal financing to $12.3 million.
And they're not wasting any time getting started. A few companies have already started their summer exploration programs.
Last week, Kaminak Gold (TSX-V: KAM) announced its 2011 drill program has begun on the company’s 100%-owned Coffee Gold Project, located in the White Gold District, Yukon Territory.
Kaminak's exploration program is budgeted at $15 million and includes 40,000 meters of exploration drilling, geophysics, and the collection of 10,000 new soil samples in previous unexplored regions of the property. With this work, the company hopes to expand and the size of eight gold zones that were discovered last year.
Meanwhile, one company already has drill results.
Gold's "Louisiana Purchase"
Not long ago, the world's largest uranium giant practically gave away billions of dollars worth of gold to one small exploration company... for only $250,000!
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Last Tuesday, Golden Predator (TSX: GPD) announce final assay results from its winter 2011 diamond drilling campaign, which was designed to expand the recently discovered Bohemian Zone at the company’s Brewery Creek project.
The best drill results include 74 meters of grading 7.08 g/t of gold in hole BC11-198.
Despite that this was not the initial discovery of gold at Golden Predator's Bohemian Zone, share prices still jumped 33% after the news — and the stock traded ten times its average daily volume:
Is There Still Time to Buy Yukon Gold Stocks?
I've been receiving many an e-mail asking what will happen next month as we now deal with the “Sell in May, Go Away” mentality that's just kicking off.
The summer months are typically quiet for junior gold exploration stocks. But while this has been the general scenario for the market overall, we need to remember good companies that deliver results will always perform well — no matter what time of year it is.
I expect it will be another typical summer for the overall junior mining stock market.
But I believe Yukon gold stocks will buck the trend and surprise everyone with much higher share prices.
In addition, we have the seasonal situation that has developed up in the Yukon, which I think will also buck the trend this summer as a massive amount of exploration work shortly gets underway.
So as it relates to the Yukon stocks, buy in May and earn the pay.
With so much exploration going on, someone will no doubt find gold...
As the exploration camps open and the crews hit the ground running, I think we are going to see what a modern gold rush looks like.
Word of this is going to spread fast particularly if a big, new discovery hits the market. This could bring in a whole new group of investors who have not been in our market before.
Success in the Yukon this summer could make the entire junior mining sector a very hot market indeed as we move into the fall.
And shareholders of exploration companies that are looking to discover the world's most important metals — gold, silver, uranium, copper, etc. — will likely be handsomely rewarded.