gold to rocket - quality mining ideas please

I'm super bullish on the price of gold. Governments in the major developed economies have passed the point of no return. Their debts are too great to comfortably service, let alone ever repay. And with the threat of rising interest rates blowing a massive hole though the facade, central bankers are being forced to undertake quantitative easing (Money Printing) in order to purchase government bonds to keep rates low. We all know how this will end up..

So, i think the outcome is pretty clear at this point. The price of gold is going to go up a lot over the medium term - the difference of opinion held by most people that have studied this is of magnitude, rather than direction. I personally think that it will go up many 1,000s of dollars an ounce from here, and eventually peak well over $10,000/oz. Anyways, that's just my opinion, and others will have their own..

What to make of this? How can one take advantage?
There are two obvious options:
- purchase physical gold, or/and
- own a company that produces gold.

The first is pretty easy to carry out. The second option is a hornet's nest. It takes great skill, discipline, and foresight to correctly select winning gold companies.

My experience over the years has taught me a few things about picking winners. Many of these principles are common to analysing companies in general, and some are specific to gold miners. In summary, when searching for a gold company my top priorities are as follows:

1. Management - honest, experienced, energetic, interests aligned, track record
2. Project Quality - process simple/complex, economics (capex/cash costs), underground/open cut
3. Jurisdiction - property rights, risk of repatriation, risk of conflict
4. Balance Sheet - self funding or cash strapped, timeframe for repayment if indebted
5.Exploration upside - geological characteristics, under or over explored
6. Valuation - must be attractive

I would really appreciate any ideas you have of gold companies that meet most, if not all of the above criteria. A short list of companies that i can research further.

As an example of how i would like the criteria to be implemented, i'll briefly go through one gold company i'm currently invested in.

It's called Atlantic Gold (ATV):

1. Management (Tick) -- management is honest & conservative, and have a bundle of experience having built Plutonic Resources - a 500,000oz pa gold producer - practically from scratch in the 90s. Management are also major shareholders in Atlantic Gold.

2. Project Quality (Tick) -- they own a project in Nova Scotia, Canada, that has over 400,000oz in reserves, and on which a DFS was only recently completed. Super simple open pit operation, c80koz pa production, cash cost of less than $600/oz, and an IRR of over 50%. Also fully own another resource nearby that will extend the mine life of the combined deposits to 10 years.

3. Jurisdiction (Tick) -- Nova Scotia, Canada. Not much to discuss here. Not many better places to be.

4. Balance Sheet (Half Tick) -- No debt, and c$2m cash. But the company may need to raise some equity capital to fund the development of its Nova Scotia project. However, with an IRR of over 50%, and payback period of 18 months, there's a very good chance that only a very small amount of equity (and perhaps none, if the gold price continues north) will be required; and the superb economics and low risk of the project ensure swift repayment of any debt.

5. Exploration Upside (Tick) -- This is the really exciting part that is totally under appreciated. Wally Bucknell, the MD of Atlantic Gold, was the exploration manager of Plutonic Gold in the 90s, during which time it discovered ~10M ounces in WA. He was awarded exploration manager of the year in the 90s. He's a very high calibre geologist, and he makes a very convincing case for why there is likely to be many millions of ounces of gold in the Nova Scotia, where it has its two soon to be developed mines. To cut a long story short: there's no open cut mining culture in Canada, with only a couple of open pit mines in the whole country. Nova Scotia has only been explored with the mind set of looking for high grade veins underground. The big secret is that there's a heck of a lot disseminated gold near surface that can easily be mine via pits. Easy pickings, especially for someone of Mr Bucknell's calibre. What's held ATV back from going on a crazy exploration binge is funding, but that will soon change with the resources that come with a highly profitable operating mine.

5. Valuation (Tick) -- Outstanding value presently. The lack of 'events' and the small cap crash of 2011 has left ATV insanely cheap. For example, it is expected to have a producing up and running in 2014, producing upwards of 80k/oz pa (60% share) at a cash cost of c$600oz, and a mine life of c5 years. And another nearby deposit that can produce at a similar rate (100% share) and a similar cost for the following 5 years. The NPV of the first project is north of $200m. What do you think the entire company, (with two projects with a combined NPV likely approaching $500m, and super exciting exploration potential) should be worth? Please do and math, and tell me.


So, there you have it. This is an example of how i would like you to apply the metrics if you have an outstanding gold company that meets most or all of the criteria, as has Atlantic Gold.

I would really welcome your ideas as i need to add a bit of diversity to my gold stock holdings - it's only ATV at the moment. But please, QUALITY GOLD COMPANY ideas ONLY.

As always, all of the above in my opinion only.