Weekly Trends: August 17, 2013

Veris Gold is “Stock of the Week” | Precious metals back to levels not seen since May, 2013

Commodity Talk

It was a relatively calm week for the metals until mid-Thursday when all four precious metals accelerated upwards. Heavy buying in precious metal futures led to short covering in gold and silver, which elevated the metals back to highs not seen since May. Silver’s lesser liquidity coupled with a higher short float led the charge up over 5% on the day, which has now broken through all of our upside targets. Gold has confirmed at least a short-term uptrend by breaking through $1350 and putting in a higher high at $1365. Consolidation after Thursday’s moves in all metals should be expected and considered constructive. Resting for several days creates new buy and sell points moving forward.

Gold support levels: $1350, $1335, $1265, Resistance levels: $1390, $1425, $1475
Silver support levels: $22.75, $22.00, $21.44, Resistance levels: $23.40, $23.50, $24.00


Gold Yearly Chart 2013

Yearly Gold Chart

Silver Yearly Chart 2013

Yearly Silver Chart


The TSX-Venture posted a solid week as American markets were hit hard due to increasing concerns over Egypt and what rising oil prices could mean for the economy. The TSX-Venture recaptured the 930 level and looks to be moving towards the 950 level, which could setup a possible move to the 975 area.

Next week will be extremely interesting because the TSX-Venture temporary relief restrictions for financings, IPOs, private placements, share consolidations and debentures will be over. Two of the most important restrictions amended were that Private Placements would be allowed to be conducted under $0.05 and that shareholder approval would not be required for share consolidations of less than 10:1. The exchange’s action in amending these types of rules really highlights how poorly a large number of companies are doing and that careful due diligence is now of utmost importance. Next week we expect numerous rollbacks for companies that were unable to finance below $0.05 during the temporary relief period, as they will be unable to do so legally moving forward.


TSX-V Chart

TSX-V Chart


Veris Gold Logo

Symbol: VG.T
Share price: $0.48
Shares outstanding:  107,641,344
Market cap: 51.7 million

Veris Gold is an interesting gold story that we first covered in Tickerscores: Nevada Producers. The share price of Veris has had a rough ride in the last year, but we believe the company has started to turn things around and the upside potential is favourable. With a market cap of only $52 million, Veris is extremely undervalued based on several different metrics and is profitable at current gold prices.

Q2 financials were impressive; Veris’ Net income was $9.4 million while many gold companies including majors were in the red.  Management said cash costs would decline as production ramped up and we saw this in the quarter with a drop of $433/oz ($1509-$1066). Toll mining has also started to provide the company with additional revenue, with $1.7 million reported in Q2. Another positive sign is insiders have been actively buying shares in the open market since May.

A few comments from the recent financials from Veris CEO R Lee Chapman:

“We expect to continue to strengthen quarter after quarter and we feel confident that by continuing to optimize mill and mining operations we are well on our way to meet our year-end forecast of achieving $850 cash costs per ounce sold and producing 145,000 to 155,000 ounces of gold for the year at Jerritt Canyon. Production at our new Starvation Canyon mine continues to both meet and exceed expected targets.

We are also very pleased to see our recent toll milling contracts begin to positively impact our revenue stream and we look forward to increasing this source of cash flow over the next several quarters.”

One of our research analysts owns shares of Veris Gold and reserves the right to buy and sell Veris Gold stock at any time.

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