Gold Stock Bull

YGC Resources has to be one of the most underestimated gold miners on the market. They fly under the radar of many goldbugs, due to a lack of effective public relations. But the management of YGC has a core competency in producing gold, not producing slick marketing campaigns. This is good news for anyone reading this article and getting in before the resource update shines a light on the value and potential of this little Canadian miner.

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We hate to agree with the uber-annoying Jim Cramer, but he has picked this one right. Cramer says that Yamana is the cheapest and best gold stock and prefers Yamana over more obvious picks such as Newmont or Goldcorp.

We have long been a fan of Yamana Gold and recently announced that we picked up Jan $12.50 call options on Yamana. Why? Let’s take a deeper dive into Yamana Gold.

Yamana Gold Profile

Yamana is a Canadian gold producer with significant gold production from four operating mines in Brazil, as well as gold and copper-gold development stage properties, exploration properties, and land positions in all three major mineral areas in Brazil. Brazil enjoys political stability, has the largest economy of South America (ranked #10 in the world) and offer a large industrial base. The country’s geological potential is abundant and relatively under-explored. Additionally, the government permitting process is efficient and expedient since mining is culturally embedded in Brazil. Yamana has also been benefiting from a weak Real in Brazil, although it has been strengthening with the impressive growth of the Brazilian economy.

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The mining industry is enjoying high prices, high profits and thus, high cash flows. What to do with all that extra cash?

Special dividends and share-buybacks to reward shareholders is one option. But with the expectation of even high prices on the horizon, many mining companies are looking to use this cash to increase their production potential. Developing new mines is another option, but the process takes several years, sometimes decades. An even better option, one that we are seeing gaining momentum as of late, is to expand production via purchasing other mining companies.

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