NEW YORK (ResourceInvestor.com) -- Back in 2002-3, stock performance rankings for the mining and metal sector, especially gold and silver stocks, carried alluring percentage gains. Now it's a sorry sight with twice as many companies showing a loss rather than a gain for the half year, and just a heaped handful having doubled their stock prices.
The top rungs are dominated by uranium stocks and junior explorers. Indeed, the biggest brand name near the front of the pack is Cameco [CCJ] and it is only 28% higher to the end of June.
Best performer is Mustang Minerals [TSXv:MUM] which used to be known better as a platinum explorer, but hangs its almost 350% gain this year on success at the Maskwa/Mayville nickel project in Manitoba. Then there's Gitiennes [TSX:GIT] which has got a lot of traction since May on results from the Tucumachay gold project in Peru. And uranium driven Maple Minerals [TSXv:MPM] has done very well too.
Strong performers can continue to perform well, and there are plenty of reasons to keep betting on many of these stocks even though they have run hard and fast. But those are the pretty stocks. We're interested only in the really ugly Cinderella step sister stuff.
If you're inclined to seek value opportunities and special situations, then head straight for the bottom of the pile where stocks have been bludgeoned for good and bad reasons. Among the carcasses are some abandoned and overlooked victims who might be worth a dollar or two of resuscitation.
So, donning protective gear and holding out the usual caveats, this is what we found.
From worst to bad
The most obvious train wreck, alright, meteorite-into-a-Yugo, is Apollo Gold [AGT], which has been known as Appalling Gold for good reasons. This stock created a lot of wealthy people for a few short months late in 2002, but it has been a disaster ever since. It's gone from C$4 to pennies and it looks seriously at risk of losing its Amex listing.
There is literally nothing good to say about Apollo Gold's recent history, which is why we suspect it might be worth a punt at these pathetic levels. Management did nothing for itself, but the brand has some retail value as does the Amex listing (think shell). There could even be a bonus in Apollo recently selling its soul to BMO Nesbitt Burns so that the firm can flog the Nevada assets. Apollo may yet get on with exploration which it seems to be a whole lot better at than mining.
Apollo's Black Fox project in Timmins, Ontario is in a good district with interesting neighbours. If the project can be made to work, and we have to be forthright and say we'd prefer different management, then 30 cents a share may be worth the risk.
The Timmins connection carries us to another smash-up - St Andrew Goldfields [TSX:SAS]. It has given up two thirds of its value, but it retains a 28% stake in Geoinformatics [TSXv:GXL] which is worth 10% of St Andrew's market value. Geoinformatics remains a great speculators derivative on the generative exploration model, and any hit it scores on the various projects it is servicing could pass through very quickly to SAS. But beware bad habits in SAS like option repricing, and a revolving door for management.
MNT] disappointed investors and got walloped for it, deservedly. On top of that the market in London for this sort of junior stinks right now thanks to Regal Petroleum. But now that MinMet it is an outcast among outcasts and worth but 2 cents a share, it's time to reconsider.
My thinking on MinMet is much like Crew Gold [TSX:CRU] some time back. Crew was discounted, disavowed and distant from Toronto. Yet it's up almost two thirds in the half year and against a lousy market. Opportunity and profit often lurk where no-one else wants to go.
River Gold [TSX:RIV] is packed with true believers in a higher gold price but who got blindsided by the strong Loonie and rampant cost inflation. So having once been a high beta high flyer at the start of the current gold cycle, the stock has turned into a leaden turkey attempting acrobatics.
This stock doesn't meet the criteria in terms of its ropey balance sheet and continued capital demands for its high cost mines, but it is one you can pack away and wait for gold prices that are high relative to all currencies. It's also a real dog in the broader market, but a consensus is there to be switched.
Look out for a likely consolidation with major owner Western Quebec Mines that could add some price action.
Canyon Resources [CAU] made a particular hedge fund very wealthy on the long and short side ahead of last year's election that killed the 10 million ounce McDonald deposit. So now everyone hates Canyon, especially those who bought it close to $5/share and see it struggling at 70 cents.
That's a financial synopsis of pain and suffering.
But grief is an event, not a commandment, so Canyon's positives emerge - there's the real possibility of extracting a huge damages settlement from the state of Montana; the company has a tonne of uranium exploration data in inventory that can be sold rather easily in this climate; the Hycroft mine looks a serious candidate for a restart; some Montana leases could be reactivated for development if new extraction methods are found; and there's a new boss, James Hesketh, who knows the financing side of the business from his days at Rothschild.
Northgate Minerals [NXG] has accumulated more cash from its mining than nearly anyone in the senior and intermediate gold group. It has been an impressive operational and financial performance in the circumstances, but Northgate has few believers as it stomps through a regulatory process for the Kemess North project.
Ironically, the problem now may be too many cool heads among an impressive analyst following for the stock. Plus management is less than promotional; oftentimes contrarian. That can play to your benefit when management proves the sceptics wrong, much as Wheaton River did repeatedly.
Minefinders [MFN] has been burnt in a few days after doing what so many other companies have lately - coming up with a feasibility study for its Dolores project that fell short of analyst modelling. It costs a lot of money to build and operate even a modest mine these days, but the opportunity now is that the bad news has been priced in rather viciously. Mine life cycle suggests Minefinders may be the least risky pick in this bunch, especially if it can optimise its mine and avoid utilizing any of the capex contingency, and finance the project conservatively.
Other opportunities to watch: Aurizon [TSX:ARZ] - takeover speculation, good exploration results; IMA [TSXv:IMR] - sitting on a monstrous pile of silver and lead but getting nothing for it because of a legal dispute with Aquiline [TSXv:AQI] which is claiming the Navidad project; J-Pacific Gold [TSXv:JPN] - relationship with Jipangu could give it access to Apollo Gold assets; Golden Star [GSS] - probably too late already, but never say never; African Platinum [LSE:APP] one of the better Bushveld prospects that has been hammered this year; Altius [TSXv:ALS] an early runner on the uranium boom, but it's unlikely that it's reached its full potential; Miranda [TSXv:MAD] - prospective land positions that accelerated a Nevada staking rush and attracted majors to earn in.
We'll be back in January to see how these rescue punts off the goal line have played out.