Article from: The Australian SEE this is a seamless transition from this morning's Pure Speculation column in The Australian.
There we simply ran out of space when just getting down to our favourite subject - gold.
When we were so rudely interrupted by the limitations of print media, we were about look at some gold stocks that may be of interest - and especially in view of what we said in Friday’s The Dirt when reporting the view of BGF Equities’ Warwick Grigor that investors should forget most brownfields gold projects within Australia. He prefers gold deposits that have more upside - that is, at least 1 million ounces of gold - and ones that are located outside this country where their costs are not going to be hobbled by the rising Australian dollar. It is the sharp increase in our currency which has shaved much of the benefit of the higher gold price off our domestic producers' bottom lines.
Grigor likes the West Africa story - and there is no question this is a compelling one, and on Friday we listed his picks of the 1 million-plus ounce crowd.
In fact, this morning he has put out a quick note to clients crunching the comparative numbers for 20 goldies. Several of the brownfields companies - Apex Minerals Catalpa Resources, Navigator Resources and Saracen Mineral Holdings - all look quite expensive, says Grigor, and selling at significant premiums to their net present values. But the African plays - Adamus Resources, Gryphon Minerals, Indago Resources and Perseus Mining - all look decidedly better value, he says. All are selling at discounts to their NPV.
He sees Perseus as the best value of the sector, offering size and volume. "Once it moves to Canada, it will be re-rated and there is always the takeover premium that should be in the stock, but is not there yet", Grigor concludes.
IDG Price at posting:
$2.50 Sentiment: Buy Disclosure: Held
