May the best of 2012 be the worst of 2013

Editor’s note: This letter went out to the insider’s list on Jan. 1, 2013, and all stock prices and data are based on Dec. 31, 2012 closing prices. Most of the stocks in this post advanced further on Jan. 2 – Newstrike Capital rose another 6%, Lumina was up about 2%, Sandstorm Gold rose 4.5% and Metals & Energy advanced 2%.

January 1, 2013

Dear investor,

Thanks for visiting my blog, World of Mining, signing up for the insider’s list and reading what I write. I wish you and yours a happy and prosperous 2013!

2012 was both a challenging (to put it mildly) year for junior mining stocks and a great opportunity to pick up high-quality names at bargain prices. I hope you managed to take advantage of some of those sales.

Sandstorm Gold, the first company that I wrote up, was an exception to the rule. Its gold streaming model shone in a terrible financing environment for juniors and shares almost doubled in calendar 2012, including a 20% advance since I featured the Nolan Watson company in my first blog post. Sandstorm Gold also obtained NYSE and TSX listings in 2012. Sister streamer Sandstorm Metals & Energy did even better, advancing 68% since my Sandstorm post (and 43% on the year).

Newstrike Capital, featured on Sept. 20, was a different story. Shares were down about 24% in 2012 and 15% since I wrote about Newstrike on World of Mining. But the stock rallied more than 6% on Dec. 31 and major shareholder Lukas Lundin added to his stake late last year, picking up 2 million shares at $1.80 through one of the Lundin family trusts (the topic of my latest post). This year, Newstrike will put out a maiden 43-101 resource estimate on its 100%-owned Ana Paula gold deposit in Mexico’s Guerrero Gold Belt. I view the Lundin purchase as bullish and suspect – knock on wood – that the $1.80 he paid will be the floor for the stock going forward.

Shares of Ross Beaty’s Lumina Copper finished the year at $9.43, virtually the same level as when I wrote up LCC but down considerably from late March, when the stock hit $17. Growth in China may be slowing, but demand from the rest of the developing world is supporting copper prices, which have rebounded to pre-financial crisis levels and stayed there. I expect Lumina and its vast Taca Taca copper deposit in Argentina to be snapped up by a suitor in 2013. Another copper play I featured, Amerigo Resources, has dropped a few pennies and now sports a 7% dividend yield. On Amerigo, a pessimistic Mr. Market seems to be focusing on bad news in the rear-view mirror while ignoring company-specific positive developments that should drive revenue and earnings going forward.

While I have worked for several years at a major daily newspaper, World of Mining is my first foray into the world of web publishing. I am honoured that you have joined the thousands of investors – from Canada to Panama, Chile to China and points in between – who have stopped by or signed up since the August launch of WorldofMining.com.

In 2013, I will continue to offer up investment ideas at World of Mining, as well as roll out some new features. And I suspect this year will bring better times for long-suffering junior resource speculators – particularly those who invest their money in high-quality names.

Best regards,
James Kwantes

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