It has been well-documented that
gold miners, large and small, have been
experiencing a renaissance of sorts in recent weeks
. Left for dead earlier this year after close to two years of
lagging the futures prices of the yellow metal they extract from
the earth, it feels gold miners are finally starting to turn the
corner.
Those that are willing to embrace might want to have a look at
Pershing Gold (
PGLC
), a newly formed gold exploration and development. Pershing is
looking to build a portfolio of lucrative precious metals
properties, but for now the bulk of the company's operations are
focused on the Relief Canyon Gold Mine in Pershing County,
Nevada.
Yes, Nevada is the "Silver State," but by some estimates the
state is one of the five largest gold producers in the world, a
factoid that bolsters the bullish thesis for Pershing Gold.
Earlier this month, Pershing announced the discovery of a new
high-grade gold mineralization at the Relief Canyon Mine
property.
Building on the success of Phase I, the Company is now
carrying out its Phase II 2012 drilling program at Relief Canyon,
with an emphasis on identifying and testing targets on lands
within the Pershing Gold-Newmont AOI. Results from this drilling
are pending, the company said in a statement.
Micro-cap miners often concern investors because at the
development stage, many of these firms do not have solid balance
sheets. Pershing is working to be the exception. In April, the
company said $9 million of indebtedness and warrants issued in
connection with the Relief Canyon Mine acquisition was been
converted into shares of common and preferred shares. And in
March, the company reduced its shares outstanding by over 22.4
million.
Balance sheet strength is essential for junior miners because
sound balance sheets allow for lower borrowing costs. That much
is obvious, but the more Pershing solidifies its balance sheet,
the better positioned it will be to carry out its true mission,
which is to profitably extract gold from the earth.
Should Pershing's mining success come together, this 30-cent
stock will prove the undervalued thesis correct and even if the
shares double in price, Pershing would still only have a market
cap of $120 million, easy enough for a large-cap miner to come
along and swallow Pershing in an acquisition.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.