Exeter Resources (NYSEMKT:XRA)
Exeter Resources (NYSEMKT:XRA) owns the Caspiche mine in Chile, which has a massive 40 million ounces of gold Measured & Indicated Mineral Resources. But the gold is in the form of lower-grade sulfide ore that is expensive to mine and process, so the project will require higher gold prices to make it economical. If and when it does become economical, though, 40 million ounces is a lot of gold that the mine can produce.
Exeter stock has done quite well this year too: it has gone from $0.321 on January 19 to $1.38, a 330% gain. But it has the potential to catch up to stocks like VGZ and THM, which gained over 600% — plus analysts expect all of these stocks to continue to rise, along with the gold miner sector in general, as the young gold bull market continues to grow.
The metric for Exeter that really stands out for analysts is the company’s valuation per ounce of gold in the ground at its current market cap. At the present market value of about $125 million, Exeter is being valued right now at only $3.13 per ounce of gold in the ground. Yes, the decimal point is in the correct place, you are reading it right, that’s three dollars and change per ounce of gold in the ground.
Those kinds of valuations existed for a number of gold miners back in the depths of the bear market lows in 2015 or in January of this year, but for the most part those valuations have risen substantially by now. It is a rare opportunity to still be able to buy a gold miner with a large deposit at such a price.
Clearly the market does not yet believe gold prices will rise high enough to make Caspiche economical. But as the examples of Vista Gold and International Tower Hill Mines show, this bull market can change its mind and re-price stocks like Exeter in a hurry. I expect Exeter Resource Corp. to be the next gold stock to really pop in the next leg up of this bull market. Its outstanding shares are standing around 88 million, while authorized shares at 100,000,000 shares without par value.