Junior Gold Miner Seeker: Due Diligence - Gold Deposits, Production & $/oz

Due Diligence - Gold Deposits, Production & $/oz

GOLD DEPOSITS / PRODUCTION & VALUATIONS

The risk with all free online resources appears to be that enormous effort goes into putting all this information together but keeping it up to date can be a problem.

I have seen a number of these lists over the years; the temptation is to think that you have found a great bargain on a $/oz basis as some companies seem so cheap, but often they are cheap for a reason and remain so.

A selection of company valuations on a $/oz basis are presented here from the Northern Freegold website as at Jan 2012, obviously promoting their own view of undervaluation. Crudely remote deposits see reduced values.

However if gold prices move dramatically the large low grade under-valued resources may become very valuable as mining becomes economically feasible even for low grade "geo-chemical anomalies" as Brent Cook might describe them. A clear capability and plan into production must increase values here.

The key ratio often quoted in Market CAP or EV / oz of gold or gold equivalent.
The tricky part comes on both sides of that equation

The Oz owned. Companies can be valued on different categories of resource, measured, indicated, inferred. The most difficult to ascertain is "prospective" resource in valuing companies which have large systems which they continue to explore, and especially high grade veins where it is uneconomic to keep drilling to define them but they have been productive for many years. This type of system probably explains Goldcorp's high valuation /oz of the Andean acquisition. Also beware of equivalent oz where the real resource is other metals than the one you are interested in.
The market value of the company. This is valuing the future cashflows and assets of the business and is volatile with the forecast values of metals. The gold resource is only a part of the company's assets, so as companies build mines, processing and other assets their value should increase as the oz in the ground become more recoverable. If we move to a true bull market for gold the "pure" value of gold in the ground should increase as "anyone" can come and build a mine and buy diggers and trucks to extract it. As miners move into production "bumps" along the road can cause significant changes to current profitability, cause doubts in the markets over future profitability, and offer investors significant discounts on quality oz in the ground near production. Given that value depends on future cashflows any barriers to development, environmental permitting, political tax risks etc will reduce values. Any removal of those barriers can create sudden leaps in valuation. For example Ecuador's mining code and tax regime is yet to be settled and could dramatically affect the valuation of Kinross' ex Aurelian assets; Dynasty Metals would be another here.

Online Resources

MINING ALMANAC - A remarkable free resource showing many analyses of mineral resources, market valuation and financial metrics. Breakdowns of company properties etc.
Also stock price analysis and sub-indices with charts to compare relative performance.
Company pages show key cash / financial strength indicators and cash burn time.
A nice page allowing fast browsing through a number of companies
Pages for stock price and volume movers

RESOURCE INTELLIGENCE - Resource upgrades - flags the gross in situ value of declared deposits. Stock prices often move significantly with these. (Shareknow site references not found ?)

Sub-Site of Resource Intelligence is
RESOURCE ANALYTICS - Large Company Database and Mapping. By Following the major miners, or other companies of interest, it is possible to review "neighbours" which are classified by progress status. Locations appear to be indicative rather than precise. Company pages detail resources and valuations by project/deposit totalling for the company.
Barrick http://www.rianalytics.com/companies/1183
Goldcorp
Newmont
Anglo Gold
Goldfields
Eldorado
Kinross
Iamgold

GoldSilverData - A great blog holding detailed data on mining and exploration stocks with valuation conclusions and opinions. Free access as at Oct-2012, paid service gives more data access.

Mining Stock Valuator - Includes Resources, production and key financials for a significant number of stocks.

Mining Search.ca - Searchable by commodity / stage / metal / location / resources. Appears to be Canadian Venture only?

NRH Deposits Survey - 2012
An excellent document reviewing global gold deposits, grades and ownership.

BMO Report - 76 new Gold Mines 2012-2020
A good study considering the relative merits of a range of deposits and development projects

A Comparison of Selected Gold Junior Production Volumes and Costs
Based on a Midas Gold presentation - Stock list added by myself.

GOLD MINER PULSE - A good resource for both gold and silver deposits. Appears to be live and up to date, showing change history. Showing gold resource - beware measured / indicated / inferred definitions are unclear but unusually shows grade aswell as total resource. Also shows company status, explorer, developer, producer.

Also a nice summary spreadsheet of the Goldminerpulse data by Gwyde. Good to see grade and the proportion of the total resource which is gold alongside market cap $/oz metrics. Also ore value per tonne is shown which will be a good guide to relative operating profitability however neither this, nor grade indicate whether resources are shallow or deep, driving production costs offsetting grades.
As with most comparable tables further prospectivity to grow the resource is difficult to assess.
The ideal here would be to summarise NPV (net present values) though these will have been calculated at different gold prices, construction costs and production costs, e.g. oil over time in NI 43-101 reports.
Who has models in place to re-calculate a wide range of company NPVs or IRRs (or Internal Rate of Return) at various gold prices. We could then calculate market cap as a % or discount to NPV at gold prices where the market has based.

MINEFUND - Largest In situ Value Global Gold Deposits
Largest Gold Deposits and Grades - 270 global deposits
Highest Grade Global Deposits - Beware mixture of depths will give very different costs
History of Gold Company Acquisition Values - Interesting
Gold Stocks In Motion - Animated Metrics over time for Big Gold Stocks
Commodity Price Change Watch List

STOCKHOUSE - Danny Deadlock - Tables of junior miner valuations and cash positions - good table more junior stocks.

INFOMINE - Details of Major Mines
Free access to promoted company information. Much more subscribed.
Interactive Mapper

Mindat - Mapping of Mines and Deposits - choose search by locality

Standard Chartered Report "In Gold We Trust" - Many Tables of Company Resources, production forecasts and valuation per oz - though obviously captured at a point in time you can easily update market cap from the TSX website. In particualr, production forecasts through to 2015, now somewhat out of date but some good indications.

24HR GOLD - A general gold news site but also offering significant company information, resources, valuation, development stage and unusually production forecasts. Analysis of unusual volume stock trading volumes and "trend-power". Some features allow only limited usages over a monthly period unless you pay for membership. Long list of Reserves and Resources oz

Kitco - Contributed Commentaries - Published weekly on the Kitco website - Bill Matlack at Scarsdale Equities contributes "Metals & Minings Analysts Ratings & Estimates" - seniors & juniors - weekly updates market caps / forecast P/E

GOLD INVESTING NEWS - Decent selection of Promoted Junior Gold & Silver Companies and Investor Packs. Sign up for monthly email highlighting forthcoming news and events.

STOCK RESEARCH PORTAL - Requires membership after free period - appears to have a very comprehensive database for due diligence including insider activity?

Metals Economics Group - MEG - Paid Database - regularly quoted.

INTIERRA / RMG RAW MATERIALS GROUP - Another paid professional service. Claims largest coverage and particular strength in mapping, 68,000 companies, 50,000 projects - more details HERE
and HERE

Metal Bulletin Company Database - Paid Database

Minecost .com - Older Data free - up to date paid - Data shows full mine production tonnages and by metal including grades and recoveries - Data for 450 Mines.

GFMS Mine Economics - Thomson/Reuters Paid
GFMS World gold Analyst - Mine Production Report - Thomson/Reuters Paid

Mine Production Data - Mine by mine production detail, tonnages, grades, recoveries; free to 2005, pay after. Same site also provide "Mine Cost Curves" - excellent presentation showing the tonnages available at different costs - premium pricing

GoldSilverData - A great blog holding very detailed data on mining and exploration stocks with valuation conclusions.

Beat The Market - A Promotional Site. I am wary of accuracy here but a list of smaller explorers aswell as the well known developers. (see second spreadsheet listing resources and $/oz)

Natural Resources Canada - NRC - Gold deposits of the world: distribution, geological parameters and gold content. Somewhat dated but enormous detailed geological database of data on global gold deposits nnd mines. Much more information at their site.

USGS - US Geological Service - Database of Past and Present Mines and Deposits