top 5 junior gold and silver companies

Evans and Partners latest junior gold and silver company report.

JUNIOR GOLDS OFFER SOME EXCEPTIONAL VALUE

We initiate on five small emerging gold producers, increasing our overall coverage of gold companies to 16 companies. The 5 initiations are Beadell, Cerro, Doray, Indochine and Millennium all of whom have either commenced production, or are entering production in the short to medium term. We initiate on all with positive recommendations, due to the greater discount to valuation, and high perceived exploration upside with respect to Cerro and Indochine We stress that these companies represent the high risk end of the gold market, but also believe that there is very significant real upside in these stories.

? We find key value uplift tends to occur during the development and early production stages, and our aim with this study is to add value through early identification of the “stars” within the emerging producer space.

? Whilst the majority of gold companies are trading at a discount to valuation, the extent of the discount is very much concentrated within the emerging producer space, with Cerro, Red 5 and Millennium featuring as the most attractively priced on the basis of discount to NPV valuation. Indochine and Cerro are CUM a raising to fund their key projects, but still appear attractive if we apply the appropriate share capital dilution.

? With the exception of Doray, all companies offer long mine life, with the high grade and strong cash generation capabilities of Doray’s Andy Well project offsetting the negative of a shorter mine life.

? Cerro presents as the most attractively priced company, even assuming some funding dilution, and its exploration tenements around its Cerro del Gallo project are, in our view, amongst the more attractive within our junior gold portfolio, as evidenced by success to the north at Namiquipa, where high grade silver intercepts have been reported.

Cerro has the huge advantage of having both gold and silver prospects plus multiple locations with very low mining costs.