Bob Moriarty of 321 Gold profiles two gold explorers, RJK Explorations and Winston Gold, that he sees as low-risk, high-potential stocks.
Gold and silver shares have had quite a ride higher since the 15th of December when the Daily Sentiment Indicator from Jake Bernstein called the bottom to the day. Anyone who reads my site knows that I am a contrarian. I loved gold in December because everyone hated it. But I’m getting a little nervous now because it’s getting a trifle too popular. The speculators are running up the spec longs in the COTs and I would be a lot happier if we had a correction for a month or so.
So I have been looking for some low risk, high potential stocks that are cheap now and would be even better if they went down. I found two that have just released excellent results and the market still doesn’t get it.
I wrote about RJK Explorations Ltd. (RJX.A:TSX.V) on the 18th of January and told my readers to look out for drill results soon. The shares were $0.15 then giving the company a $2.1 million market cap. I said it was cheap.
On the 7th of February RJK released results showing excellent results from three of the four-hole program including 0.5 meters of 36.84 g/t au in hole 17-01, 2.5 meters of 9.05 g/t au in hole 17-02 and 14.0 meters of 5.37 g/t gold in hole 17-04. Those are what you want to see in a drill program. In spite of those results, the company still has a market cap of only $3 million. Buy cheap, sell dear.
It’s still cheap but not nearly as cheap as it was then. They do have a 183,000 ounce gold resource already so ignoring the great results announced on the 7th of February, the company has high grade gold at $20 an ounce in the ground. There isn’t much downside.
Another company I follow and own is named Winston Gold Mining Corp. (WGC:CNX; WGMCF:OTCQB)) and is drilling their primary project in the Winston Gold District located some 18 miles southeast of Helena, Montana. The site has two former gold mines called the Custer Mine and the Edna Mine.
Management intends to drill to develop a resource sufficient to begin trial mining of somewhere between 150 to 230 tons per day. Prior historic production of 100,000 ounces showed a production grade of 0.67 ounces per ton or 22.8 g/t.
Winston Gold holds a lease on the property that requires a yearly payment of $42,000 and exploration expenses of $200,000 yearly. There is a 23% NSR on production based on either patented or unpatented ground.
The company released excellent results on the 9th of February showing 1.34 meters of 18.8 g/t gold or 4.4 feet of 0.55 ozt in hole 1720. This was on top of other results back on January 23rd including results from hole 1633 that showed 0.7 meters of 44.57 g/t gold or 2.3 feet of 1.3 ozt.
I started talking to the company a year or so ago, long before they became an advertiser. I know one of their directors very well, Ben Porterfield. Back in 2006 the renowned Bob Bishop and I flew up to Alaska to visit a new company spun off from the Alaska assets of AngloGold called International Tower Hill Mines Ltd. (ITH:TSX; THM:NYSE.MKT).
One of the projects we visited was the Terra Gold project where we literally broke off pieces of 10-20 ounce gold. It was remarkable material. The ugly white rock was speckled with pinhead size pieces of gold (see image above).
Ben Porterfield and his partner, a former Korea USMC vet who was as deaf as a stump, were mining 10 ounces a day from the vein with equipment you couldn’t give away to a Goodwill thrift shop. I estimated at the time that you could replace the equipment for $10,000 and I was being expansive. I made up my mind at the time that if he ever got involved with another small-scale startup, I wanted to be part of it.
And interestingly enough, another company did a deal on Terra with International Tower Hill and blew millions of dollars and didn’t produce as much as Ben and his partner did operating with little more than hand equipment. That was the easiest to mine gold that I ever saw and two guys with $10,000 worth of equipment could make money and a company with millions couldn’t.
Winston Gold has been through an interesting year. The company peaked at $0.63 in October and with the decline in gold prices and a big shareholder unloading shares just as fast as he could, the shares dropped to $0.115 in late January. I participated in the PP at $0.40 in November and thought the shares were reasonably priced. When they tumbled to the new low three months later, I loaded up the boat. If you like something at $0.40 and it goes to $0.115 you have to like it more. Nothing at all has changed and the drill results validate their theory. I believe they will go into production and I want to be a shareholder when they do.
RJK and Winston Gold are advertisers and I have bought shares in the open market and participated in the PP with Winston Gold. Please do your own due diligence. I share in neither your profit nor your losses.
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
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1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: RJK Explorations and Winston Gold. RJK Explorations and Winston Gold are advertisers on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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Image supplied by Bob Moriarty.
( Companies Mentioned: RJX.A:TSX.V, WGC:CNX; WGMCF:OTCQB, )