I like his claim that its worth $3-4 / share and has the potential for much more than that over time.

http://www.theaureport.com/pub/na/7192

TGR: Those are features that every investor is looking for. How do you find investments with those attributes that aren't overbought at this point?

TM: That comes back to trying to get in early and seeing these as they're developing and following management and good stories. We've had a couple cases where we invested in a company because we knew that the assets were significantly undervalued because the company hadn't had exposure and that management changes were pending. When new management eventually came on board, you really saw their effect on the company.

TGR: What are some small caps that you're particularly excited about with these attributes?

TM: Well, one name that has treated us quite well over the last year would be Timmins Gold Corp. (TSX.V:TMM). It's a new producer in Mexico that's come to market with a pretty appetizing mix of production growth and exploration results. They're tracking more than 80,000 oz. per year now. Its Sonora-based San Francisco Mine could move to 100,000 oz. and cash costs should be just over $400/oz. for the life of the mine. There's some really good cash flow from a company like that, which just breached the $200 million market cap. I like this name and I think recent exploration success shows that they have potential to significantly add to the mine life.

TGR: They've had quite a run-up since the beginning of January 2009.

TM: True, but I still think they're undervalued compared to comps. By my numbers, they're only trading at about 60% of their net asset value (NAV) where comparable companies trade at NAV or at a premium. Looking ahead, Timmins will likely use its cash flow to acquire other small producers and developers, consolidating the Mexican gold space. I think it's easily worth a $3–$4 per share, with potential for much more than that over time.