Moving into a higher gold price environment, both Dominion and...

Moving into a higher gold price environment, both Dominion and Integra Mining appear to be standouts in a sector decimated by rising costs, production problems and a lack of positive sentiment. Many investors have come unstuck in the past due to poor stock selection and buying a gold stock without mitigating company risk that exists in any gold price environment. Remember that hype alone does not translate to smooth mining operations and the continuity of a resource. The following two gold companies at least deserve some further research and consideration.

My other major gold holding is in Medusa Mining (MML) which is currently suspended from trading to allow for the completion of the Philsaga aquisition. Gold stocks with perceived political risk in exotic locations are the ones likely to become overvalued as the gold bull market matures and there is no need to cover it at this stage.

DOMINION (DOM) 31.5c

* Mkt cap around $30m
* Cash and bullion of $13m. There is a $7m debt facility with ANZ.
* Challenger Mine moving out of its transition phase with costs expected to fall further when the underground operations reach their full potential.
* M1,M2 and M3 shoots providing excellent results (around 1000 g/t) from underground drilling with surface drilling at M3 showing some potential also.
* Fast conversion from resources to mining reserves.
* Grade has come in 19% above budget with stoping currently underway
* Greenfields hits at the copper-gold project (Wongan Hills) with HMS also discovered in SA after the company was testing for gold
* Currently hedged at $580 AUD for around 90,000oz and providing there are no issues with the resource this is a favourable position to be in
* Shares are tightly held and despite the stock appearing to be a sitting duck for corporate activity (there are some cashed up predators out there) it would certainly be an interesting battle.

DOM has been a real survivor in the Australian mining industry with management with the company since 1989 (following Whim Creek takeover). The company during previous mining booms has seen its market cap increase to levels in excess of $400m. With an excellent production profile and some exciting exploration to come the company appears well set to benefit from the next phase of the gold bull market.

INTEGRA MINING (IGR) 8.1c

* IGR's share price moved strongly on Friday due mainly to my broker's clients having an excellent short-term win elsewhere and having funds rotate into the stock.
* There is considerable news expected over the next 3-4 weeks with drilling results and hopefully the finalisation of the Randalls aquisition which appears to have been delayed.
* As per my previous post management appear to be first class and I am looking forward to the journey under Chris Cairns leadership. The Kalgoorlie region may well have been written off as a place to grow a gold company, however part of the attraction with Integra is giving them the opportunity to dispel this myth.

IGR is a high risk/high reward emerging gold company with many boxes ticked apart from having a market capitalisation that reflects their asset base.

(Please note my personal holdings in IGR are well in excess of 1m shares)

The scene is set in the Australian gold market for another round of consolidation (more than likely mergers), followed by increasing stock rotation which will drive some companies into the breakout stage then hopefully a market driven by fear (the fear of missing out that is).