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3 Undervalued Canadian Junior Mining Companies for 2013

By Edited Nov 3, 2015 0 0

If you are interesting in investing in the gold mining stock sector it’s important that you check out some undervalued  Canadian junior mining stocks that also have seen insiders buying. I prefer to buy stocks that see the CEO and CFO buying stock in – it gives me more confidence in the company. I also like to buy companies that are undervalued based on their fundamentals and future earnings potential. The good news is that there are several companies that fit this bill currently and sentiment in  the sector is pretty low – which is very bullish for these stocks!

Why Canadian Junior Mining Companies? Investing in Canadian Mining

Gold mining stocks in general are at one of their lowest points in years.

While the price of gold has risen to over $1,600 an ounce, the value of gold mining shares has not yet reflected this price increase.

With huge potential of a future increase in the price of gold, the potential for these companies to earn huge profits is great. Every time gold increase $100 an ounce, this profit goes straight to the bottom line of a gold producer.

An increase in the price of gold also bodes well for projects that might not have been economical at a lower price. When the price of gold rises these projects become feasible and it reflects in the stocks share price!

Can You Buy Canadian Mining Stocks in The US?

The answer to this depends on which stock. Many Canadian stoks have duel listings on a US stock exchange so you can in fact invest in them.

Smaller Canadian stocks however might not have a US listing just yet. Some Canadian stocks that trade on US exchanges also might be  less liquid on the US market.  You can easily start a global trading account if this worries you. Talk to your broker if you have one on how to do this.

Here are three Canadian gold mining stocks I like. I use the Price to Earnings ratio (P/E) and forward P/E for valuations. They also have seen recent insider buying

3 Undervalued Canadian Mining Stocks to Consider for 2013 and Beyond

All three of these gold stocks have operations located in Canada and are considered undervalued based on their fundamentals, future earnings potential and gold ounces in the ground.

I’ve included a brief overview of the company, their P/E ratio and forward P/E ratio, which is based on analysts consensus estimates. I’ve also included important info.

On insider buying – all three have seen a significant amont of insider buys in the past year.  I consider this important as it shows their confidence in the company, which increases my own confidence in the company.

#1 Brigus Gold 

This is an undervalued Canadian junior mining company that I think has the potential to double in 2013 and go even higher beyond that.

Brigus Gold

Recent 2013 news for Brigus:

Brigus reported fourth quarter 2012 production which met their expectations. They currently trade with a P/E of just 11 which makes them very undervalued based on their earnings.

The company recently released 2013 production guidance and should produce around 90-95K ounces in 2013. Analysts expect them to have an annual earnings per share of .24 which gives them an insanely cheap forward P/E of just 4!

Brigus Gold

 Brigus reported outstanding drill results at their Grey Fox property, which is looking like it will become their second mine sometime in 2015.

The company released a brand new presentation recently which gave an estimate of what to expect in terms of cash flow and earnings from operation in 2013. It shows that Brigus has the potential to produce around $70 million in cash flow in 2013 and should have plenty of money to explore and expand their operations.

Insiders are also purchasing a large amount of shares which only makes this story more compelling.

#2 Claude Resources

Claude Resources

Another great Canadian mining company that I feel is undervalued is Claude Resources. They are more undervalued based on their gold ounces in the ground than they are their earnings but I think they have huge upside potential regardless.

Analsysts consensus earnings estimates for Claude Resources in 2013 is .11 cents per share. With their current share price of just .53 cents, this gives them a forward P/E of just 4.8!

Claude Resources

As with Brigus, Claude has seen a good amount of insider buying during the past year. Presumably, insiders think the stock is undervalued and have been accumulating as they feel it will increase in price. The x's below represent when an insider bought shares:

Claude Resources

But the real reason I like Claude Resources is their proven record of expanding their resource base. This Canadian Junior Mining Company has a total gold resource of over 4 million ounces - up from just 806K ounces in 2008! They are very undervalued.

I am hopeful this stock will at least double in the next 2 years or so and it certainly has the potential to go much higher.

#3 St. Andrew Goldfields

St Andrew Goldfields

This is the final gold mining company I will discuss. St. Andrew Goldfields is a gold producerin the Timmins mining district in northeastern Ontario, Canada. The company operates the Holt, Holloway and Hislop gold mines and plans to produce 90–100 Koz gold in 2012.

"During year ended December 31, 2011 (during 2011), production from these three mining operations was 74,022 ounces of gold. The Company's projects include Deep Thunder Zone, Blacktop East Zone, Ghost ZoneHolt Mine, Taylor Project, Hislop North Project, Garrison Creek Project and Stroud Project."

 

St. Andrew Goldfields

Here's what gold stock analyst Michael Fowler recently said on the website TheAuReport.com:

"The shares of St Andrew Goldfields Ltd. exhibit excellent value with an expected 35% compound annual growth in earnings (flat gold prices) and a 55% increase in gold reserves expected by 2014. . .the company has received negative investor perception for many years; this may change as it meets its future production forecasts."

They currently have an EPS of .08 which gives them a current P/E ratio of just 6.78! analyst consensus estimate for 2013 will give St. Andrew a forward P/E ratio as low as 4.

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Thanks for reading this article on what I consider to be the 3 Most Undervalued Canadian Junior Mining Companies right now.

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