Thanks to info@addictedtoprofits.net for below:

Many Junior Mining Stocks are Looking Cheap

This appeared on the Cover of Investors Digest in January 2009!

In the past year the markets have plunged been due to a global economic

slowdown and massive deleveraging or as I like to call it the mother of all margin

calls. However, this panic has lead to great opportunity. In our opinion, the way

to prosper from such crises is just not to buy everything, but rather to buy things

which are the most undervalued and which should lead the way in the next rally.

A sector that qualifies in this category is the junior mining sector. As these

companies tend to be more volatile and illiquid, they fell faster in the 2008 market

crash. The result has been to reduce many of these companies to ridiculously

low valuations.

I like the junior mining companies that possess ounces in the ground in reserves

and/or are in or going into production. The companies, which have build up

reserves, are becoming takeover targets as many seniors are going to want to

take advantage of their low stock prices and asset values by gobbling them up.

The small producers are trading at extremely cheap valuations, cash flow and at

some point their share prices will return to levels that represent their value. In

addition, in this tough environment these companies due not have to go to the

market too raise funds.

Here are some examples of companies I like at the moment:

Paramount Gold (PZG Toronto) recently announced it had 2.6 million ounces of

gold equivalent inferred at its property in San Miguel, Mexico, this property is

near where Palmarejo Silver and Gold. Palmarejo Silver and Gold (former ticker

PJO) was company that was taken over for 8 dollars a share. Yet Paramount

trades at a measly .50 down from its’ all time high of over $4.00.

Silverstone Resources (SST TSX Venture) which had $6.5 million in cash flows

for the 9 months ending September 30th, 2008 and cash costs of $3.97 per

ounce of silver along with $24.2 million dollars in cash with no debt is trading at

.70 down from its high of 4.00.

Aberdeen International (AAB Toronto Stock Exchange), a holding company

reported a Net Asset Value of 0.69 per share in the most recent quarter but

trades at a measly 0.12 a share. Aberdeen’s portfolio investments alone are

worth nearly .30 a share. The company also has royalties giving it income.

Rimfire Minerals (RFM TSX Venture) trades at .25. This is a well-diversified

company with active prospects at no less than 3 properties. This company has

about .25 per share in cash. So you are getting the company at cash with the rest

of the assets thrown in for free!

Avion Resources (AVR TSX Venture) – This Company should put its Segala

Mine into production in 2009. The mine should produce about 66,000 oz in 2009

at $450/ oz and 100,000 oz by 2011 at the same cost. All infrastructure is in

place – mill, power, gas, housing, etc. Production is slated to begin in the spring.

The project is estimated to produce over 10 million dollars or about 0.08 a share

in cash flow in 2009. With the stock at .12 as we write it looks like an absolute

steal!

Fortuna Silver (FVI TSX Venture) – This Company is a small silver producer in

Peru with an exciting exploration project in Mexico. I have visited their mine in

Peru. As of the end of the third quarter this mine had brought in over 22 million

dollars in revenue and the companies cash position as of the end of the third

quarter was nearly 42 million dollars. With the stock trading at .79 as we write

that is a market cap of about 75 million dollars so the stock is trading at only 1.7

times cash. In addition, results from their San Jose project in Mexico have been

very encouraging.

Riverside Resources (RRI TSX Venture) This is a well financed junior with

properties in both Mexico and Arizona. Their Property in Arizona has a non 43

101 compliant historic resource of 1.2 million ounces of gold. Their properties in

Mexico have had some very encouraging results. The company trades at 0.32

and has nearly .20 a share in cash (3.5 million dollars). It should aggressively be

drilling its properties in Mexico for the Future.

ATW Gold (ATW TSX Venture) – This company is upgrading its Burnakura

property in western Australia and should have the property in production by the

end of the first quarter of 2009 . As of the end of the second quarter the company

had over 9 million dollars in cash and should begin to be cash flow positive in the

second quarter of 2009. The stock has fallen to .50 cents a share.

IMA Exploration (IMR TSX Venture)– This company is cash rich and has

patiently awaited opportunity to put its cash to use. The company has over 23

million in its short term cashable GIC’s, but only a market cap of 17 million dollars

with the stock trading at .30 as we write. The company will be drilling on its

Island Copper project shortly. The acquisition of this project is step one in IMA’s

plan of taking over projects that can provide short term cash flow. IMA is in the

perfect situation to take advantage of the low prices in the junior market.

Cityview (CVI Australian Exchange) – This company is setting itself too be the

premier company in Angola. It has an interest in an Oil refinery in Angolan along

with Copper and Diamond properties. All of which should be in production by the

later part of 2010. The company is in the midst of completing a financing that will

raise it over 6 million dollars US. It has a large share structured (nearly 1 billion

shares after the new financing). However, it is very undervalued. The net worth of

these projects is much higher than the 12 million dollar market cap (after the

financing is complete) the market is currently valuing the company at.

Full Metal Minerals (FMM TSX Venture) – Full Metal is in the process of

completing financings in tranches that will allow it to put its Lucky Shot Gold

project into production. Once in production this will be on of the higher grading

projects in North America. This project will also give them cash flow. In addition,

the company has multiple projects on the go. With the stock at .24 it is trading at

a measly market cap of 10.4 million dollars.

Finally, Minco Silver (MSV TSE), which won the Prospector/Explorer of the year

award at China Mining, is worth a look. This company has a world-class project

in its Fuwan Silver project. This project is estimated to have a potential of 157

million ounces of Silver and Minco s break-even cost is estimated to be around

$2.40 per ounce. Minco has climbed from its low of .40 to $1.10. However, it is

still well below its high of over 4 dollars a share. We think Minco may pull back

but it is still a buy at these reduced prices.

Speculating in juniors is very risky. I feel that you should diversify in junior’s

cause they all possess mine specific and company specific risks. The above will

give you a nice basket of juniors and will allow you too invest at rather low levels.

You have a junior which is basically a fund (Aberdeen), juniors which are in or

soon to be in production (Full Metal, ATW, Silverstone, Fortuna, Cityview and

Avion), juniors which are well financed and will NOT need to go to the market to

raise capital anytime soon (Minco Silver, Riverside and Rimfire) and a junior

which could be a serious takeover target Paramount.

If you had a small amount of money too speculate with I would suggest you put a

small equal amount in each of these companies and then forget about it for a

year.