Sign Up NowThis Month's Tiny Gems - September 2010

Allied Nevada Gold Corp. (NYSE AMEX: ANV)
Boots & Coots Inc. (NYSE AMEX: WEL)
Northgate Minerals Corp. (NYSE AMEX: NXG)

 

 

 

Allied Nevada Gold Corp. (NYSE AMEX: ANV)

 

Allied Nevada Gold Corp. (NYSE AMEX: ANV) is a US-based gold and silver producer with a large number of early-stage and advanced exploration properties located throughout the state of Nevada. The company's flagship property, the Hycroft Mine, is located near Winnemucca, Nevada. Other advanced exploration properties include the Wildcat and Contact properties.

 

In September 2007, the company reactivated the Hycroft Mine which had been placed on care and maintenance in late 1998 by its previous owner due to low metals prices. Initial production was achieved in the fourth quarter of 2008 and the mine achieved commercial production rates in 2009. Allied Nevada successfully drilled its first three core holes in June 2010 and drilling is expected to resume this month.

 

The Hycroft Mine completed its full year of operations in 2009, allowing Allied Nevada to report its first year of positive earnings at $0.13 per share. The mine is currently producing at a rate of approximately 100,000 ounces of gold and 300,000 ounces of silver per year. The company's cost to mine the gold is between $400 and $450 per ounce, resulting in exceptional profits when gold is selling in excess of $1200 per ounce.

 

The company is in the beginning stages of an oxide expansion project which is expected to increase production to over 300,000 ounces of gold and 1,000,000 ounces of silver per year. This expansion will require upgrades to existing facilities and equipment and is designed to maximize extraction of the current reserve estimate of 2.4 million ounces of gold and 32.3 million ounces of silver. The expansion is a low-risk, high-reward project aimed at more than tripling current gold and silver production by 2013.

 

 

 

Boots & Coots Inc. (NYSE AMEX: WEL)

 

Boots & Coots Inc. (NYSE AMEX: WEL) provides a suite of integrated pressure control services to onshore and offshore oil and gas exploration companies around the world. The company's products and services include well intervention services designed to enhance production for oil and gas operators. These services consist primarily of hydraulic workover and snubbing services.

 

In addition, the company's equipment services segment provides high pressure, high temperature rental tools. Boots & Coots pressure control services are intended to reduce the number and severity of critical events such as oil and gas well fires, blowouts or other incidences due to loss of control at the well. This segment consists primarily of the company's safeguard prevention and emergency response services.

 

On April 12, 2010, Boots & Coots jointly announced with Halliburton (NYSE: HAL) that the two companies have entered into a definite merger agreement. Halliburton was most anxious to acquire the world's most experienced well control company. After all, Boots & Coots can trace its lineage back to the famed Red Adair.

 

Following completion of the deal, a new product service line within Halliburton will be created to include Halliburton's existing coiled tubing and hydraulic workover operations and Boots & Coots' intervention services and pressure control businesses. Under the merger agreement, Boot & Coots stockholders will receive $3 for every share they hold. The offer consists of $1.73 in cash and $1.27 in Halliburton common stock. Boots & Coots is holding a special stockholders' meeting on September 15, 2010 to vote on the proposed merger with Halliburton.

 

 

 

Northgate Minerals Corp. (NYSE AMEX: NXG)

 

Northgate Minerals Corp. (NYSE AMEX: NXG) is a leading gold and copper producer with mining operations, development projects and exploration properties in Canada and Australia. The company is forecasting production of 280,000 ounces of unhedged gold production in 2010.

 

The company has an excellent management team with a track record of turning around poorly performing assets. It continues to target growth through acquisitions around the globe in stable mining jurisdictions. Northgate has a very strong balance sheet with no long-term debt and a cash balance at the end of the second quarter of 2010 in excess of $200 million.

 

The company has three fully permitted operating mines with over 4 million ounces of gold reserves. Its currently producing mines include the Kemess South Mines and the Kemess Underground in Canada, along with the Stawell Gold Mine and Fosterville Gold Mine in Australia. Production at these mines is expected to be commercially viable at least through the year 2027. In addition to the 280,000 ounces of gold to be produced this year, Northgate Minerals will also produce 45 million pounds of copper. The total net cash cost of all of their operations is only $610 per ounce.

 

With very little debt, the company holds $54.2 million in assets, $23 million of which consists of cash and equivalents. Revenue Finally, Northgate Minerals has recently broken ground at its Young-Davidson mine in Canada. This mine is the latest example of the company's policy of expanding in safe mining regions of the world. Gold production at this mine is expected to begin in the first half of 2012. The mine is expected to produce about 180,000 ounces of gold per year at a low cash cost of $350 per ounce. Mine life is expected to be about 15 years.