Greg Nolan of Equity Guru writes…
“Here’s the thing… every day that a gold miner digs ore out of the ground—every day the company is in business—they reduce their metal inventory.
For companies that produce millions of ounces of gold annually, adding to reserves—replacing these ounces—requires a steady stream of new discoveries.
What investors new to this arena may not realize is that a brutal bear market, one that gripped this sector for the better part of nine years, preceded this current rally. During the bear market years, many producing companies were forced to slash their exploration budgets.
The fallout? Lean project pipelines.
Whether it’s a Senior, a Mid, or a Small Producer, the key to long-term survival is a robust pipeline of development projects and new discoveries.
If a company is unable to grow this project pipeline organically, through exploration, it needs to change tactics. It needs to take on the role of acquirer, predator.
This sets up an interesting dynamic, particularly for those smaller companies sitting on large, potentially economic deposits. Companies holding such assets in politically stable mining jurisdictions have targets on their backs. But they are in a unique position to create substantial value for shareholders.
Cartier Resources (ECR.V) is likely in the crosshairs of multiple resource-starved producers.
