Canaccord: Investors Like Juniors for Gold Exposure
Source: Seeking Alpha (3/13/08)
...with healthy returns already realized in the bigger names, some investors are looking to smaller cap junior producers and developers for their gold exposure, says Canaccord Adams analyst Wendell Zerb. That's because many of these stocks do not yet reflect the strong move for spot gold prices...
In Canaccord's Junior Mining Weekly, Mr. Zerb said:
As we have said before, gold producers receive a premium for production growth, exploration upside and superior cost structures among other things. Gold producers are going to be looking to maintain and grow their production portfolios, and junior gold equities are likely to be the source of production growth. By his estimates, the senior and intermediate gold producers under coverage are trading at an average price/net asset value (P/NAV) multiple of 1.59 times. Junior producers come in at 0.90x, while junior development companies fall in the range of 0.25x to 0.70x.