Penny Mining Stocks...Rick Rule Top Picks
BNN Market Call
Long time mining financier and speculator Rick Rule took the hot seat yesterday afternoon on BNN Market Call to answer viewer questions on precious metals stocks.
Here is my summary of of the last time Rick Rule was on BNN Market Call.
Argonaut Gold – You have had a nice move in Argonaut. Might be wise to take a little money off the table if you have a profit. Lots of risk in the smaller gold companies including Argonaut. Stay in the gold trade.
Tahoe Resources – Rick is long Tahoe and personally friendly with those who run it. A high quality company but the balance sheet is getting kind of skinny so use a trailing stop. Rick uses NPV (net present value) not P/E (price to earnings ratio) when analyzing mining companies.
Osisko Gold Royalties – Osisko is a very good name. Sean and his team are good in all aspects of the gold business. Particularly good at capital markets. A very strong balance sheet. One could almost call them a mutual fund in the gold business with royalty income.
Kaminak Gold – Rick is waiting and taking the Goldcorp shares. Rick believes gold is going up and will roll his Kaminak shares into Goldcorp. Kaminak helps Goldcorp ensure where they will get high quality growth.
Mountain Province Diamond – Likes the people is sort of attracted to the deposit. Does not own it because he thinks Dominion Diamond is cheaper. The risk in the stock is still on turning on the big plant which you don’t have with Dominion. Describes the stock as “good but not yummy”. Rick admits he does still not fully understand the diamond business.
Formation Metals – Not a formation holder. Leery about the way forward and the materials market.
Belo Sun Mining – Rick no longer owns it. Likes the people and the project. Is a little bit afraid of the social and political risk in Brazil. Had to take the gains. Looking for names to buy in Brazil as everyone is else is afraid of the place (contrarian aspect of Sprott).
Silver Standard Resources – Rick is no longer a shareholder and does not have a price target. Suggests buying puts and being happy if you get filled at a lower price. Rick is beginning to see supply destruction in certain markets which is a good thing and will lead to a bull market.
Mega Uranium – Rick admits he was early on his uranium call. He thinks it will take another couple years. His top pick is Uranium participation fund. He owns the top 2 discoveries in the space NexGen and Fission not because they are uranium names more because they are discoveries.
Cameco – Rick again says he thinks another couple years for uranium to recover. He thinks you will be happy in five years from now if you hold the stock. Consider selling puts because it forces you to buy low and sell high.
———- Past Picks – Alterra Power, Franco-Nevada, Ivanhoe Mines ———-
Brazil Resources – Is a large shareholder of Brazil. Thinks it is fully priced but believes it is going higher. Likes the quality of the people and this is a play on Amir Adnani.
Golden Arrow Resources – Nice deposit. Gratified by the recent price escalation. If longer term holder suggests to sell some and take some off the table. For silver speculators this is a decent deposit.
Silver Wheaton – The highest quality silver company in the world. The risk is the Canadian government CRA shaking them down. Thinks stock might sell off if government is successful.
Midas Gold – Stephen Quinn is a good friend of Rick’s but he thinks they made a mistake financing a couple months ago despite the mistake Rick thinks the stock is going higher.
Pan American Silver – Owns it thinks its going higher
Integra Gold – Does not know enough to answer.
West Kirkland Mining – Rick owns it. A penny stock could go higher but has risks.
New Gold – One of the best of the second tier of producers very well run. Highly leveraged to the gold price.
Pretium Resources – A large shareholder and a close friend of Bob Quartermain who runs the company. Conflicted.
Royal Nickel – Had a good run we don’t understand the gold deposit to own it at this price. Doesn’t know the company well enough to own it.
Detour Gold – Stock is going higher with a new high grade zone really likes what they are doing here.
Teck – A lot of balance sheet risk. Lots of high quality assets. Does not like the copper or coal space. Rick does some own some of the junk debt.
Northern Dynasty Minerals – Knows the company and the management well. Two large deposits neither of which he thinks will be developed this cycle. Team is spending $2 million a month in costs which is a risk.
Nova Gold – Short term has had a really really good move. Sprott owns it because of the optionality and the shareholders list. Thinks in 5 years you will be happy if you own it. Will be a volatile stock.
Newmarket Gold – Sprott owns quite a bit of it corporately and Eric Sprott personally. A stock that is tightly held so it could potentially go much higher. Will be a very volatile stock.
Cordoba Minerals – Very high quality exploration target. Exploration is a very high risk game. If you own it employ trailing stops.
Platinum Group Metals – Likes the people and the platinum business a lot. The balance sheet is tough and Sprott is the biggest lender. Pay atttention to the balance sheet every quarter.
Yamana Gold – Sprott is decent size holders of Yamana even though Rick personally has reduced his position recently. Sees good growth.
Rubicon Minerals – Does not think the company will go back into production. Deposit was not drilled off properly.
Barrick Gold – If you believe in gold you might want to look at Barrick since it is a household name.
Rick Rule Top Picks
Ivanhoe Mines – Likes Robert Friedland who is the most successful mining entrepreneur of his generation. Has never seen him fail. Political risk(s) is high.
Anfield Gold – Brand new idea but an old concept. Ross Beatty play. Might rename it Lumina Gold to duplicate the success he had with Lumina Copper. Has done it 3 times with Ross and looking forward to this being the 4th.
Reservoir Minerals – This is subject to a takeover offer from Nevsun. Reminds him of a success he had 20 years ago. A superb deposit in Serbia. Thinks Nevsun will go up substantially in price down the road after the acquisition.
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