Brent Cook is editor of the Exploration Insights newsletter. His focus is on junior mining stocks and commodities.
A global rush toward currency debasement suggests precious metal prices are more likely to rise than fall over the foreseeable future. Fortunately, debasing gold via new discoveries and production is a very slow process as evidenced by the decrease in gold discoveries over the past decade, in spite of higher prices. This lack of economic discoveries means the very few new high margin deposits will be extremely valuable to mining companies that are finding it difficult to replace their production over the long term.
Although there is good money to be made investing in profitable mining companies as their share prices catch up with the gold price, the real money will be made in recognizing and investing in the select few junior explorers that find the deposits to feed the larger mining companies. That I believe will be the story for 2013.
Lydian completed a feasibility study on the 3 Moz Amulsar gold deposit in Armenia earlier this month. The study looked at mining 2.3 Moz and showed a pretax net present value at $1,500 gold of $1.05 billion and internal rate of return of 38%. The company is currently being valued at $270 million. Amulsar is a low capital and operating cost deposit that should be a priority acquisition target for a mid-tier gold producer. . .View Full Article