489% Gains in the World's Cheapest Gold Stocks
By Dr. Steve Sjuggerud
April 12, 2007
489%...
That's what subscribers who took my recommendation to buy Seabridge Gold (SA) have made in less than two years.
I think that shares of Seabridge can rise many more times… and very soon.
Many things have gone Seabridge's way in the last two years. So even as it's risen, I've kept a "buy" rating on the stock for the entire period we've held it.
Things have gone so right, the stock is actually a better value today than it was when we first bought it! I'll explain that in a minute.
Where to Find The Next Seabridge
Subscribers to True Wealth first learned of Seabridge when I invited the company's CEO Rudi Fronk to speak at my one-day annual gold conference.
If you would like to learn about the next Seabridge – the next mining stock that could rise hundreds of percent – then I urge you to join us at our True Wealth gold conference this year.
The True Wealth gold conference is a place where geologist Matt Badiali – who writes the S&A Gold Report – and I can handpick small companies, like Seabridge, that are outstanding opportunities… but are simply too small to put in even our most speculative newsletters.
This year we have a bumper crop of opportunities…
Matt and I have invited more companies than ever before to share their stories. We simply couldn't trim the list down anymore.
Getting back to Seabridge…
Geologist Matt Badiali tells me, "By the end of the summer, Seabridge should be able to move 15 million ounces of gold from the 'inferred' category to the 'measured and indicated' category."
That would push Seabridge's measured and indicated reserves to around 25 million ounces of gold.
If he's right, that means that when you buy shares of Seabridge, you'll be buying gold in the ground in North America for a little more than $20 an ounce. (You can pay a little less for some other companies – but their reserves are often in scarier places, like Venezuela.)
$20 an ounce is cheap…
When I first recommended Seabridge, we actually paid less than $10 an ounce. But it was a risky bet… You see, the total cost to mine Courageous Lake, one of Seabridge's major properties, would be $423 an ounce.
But the price of gold was around $420. So, two years ago, it would have been unprofitable to mine the gold. It was worth paying $10 an ounce though… and we did. But we knew it was like we were buying long-term options on gold that didn't expire.
That $10 an ounce we paid should be paying off much more than it has so far, believe it or not…
The price of gold is now $670. If the total cost per ounce to mine is $420, that's nearly $250 per ounce of profit. Yet we can buy the stock for just over $20 an ounce (if Matt's right about this summer).
Which price is better… $10 an ounce when gold's at $420? Or $20 an ounce when gold is at $670? The second one is a much better deal… And remember, if Matt is right, Seabridge has 25 million ounces of measured and indicated reserves in the ground.
To show you how cheap $20 an ounce for gold in the ground is, a company similar to Seabridge was recently acquired – for nearly $200 an ounce! Agnico-Eagle recently bought Cumberland Resources, and that's the price it paid.
So if a big gold company wants to buy Seabridge, chances are it's going to pay up. If Cumberland was acquired for nearly $200 an ounce, you'd think that Seabridge would be worth at least $100 an ounce. I haven't done the specific comparisons to the Cumberland deal – but it's safe to say that Seabridge at its current price ($20 per ounce of gold in the ground) is very cheap.
Seabridge's buyout price, if it was taken over, could be double or triple its current market value, particularly after this summer when the reserves are officially reclassified.
Seabridge's CEO will be at our gold conference this summer, giving us all the details. And so will many other CEOs of smaller mining companies – companies too small to write about to a large audience.
True Wealth readers first learned of Seabridge at the True Wealth gold conference. If you'd like a chance to learn what company might be the next Seabridge, please join us this summer at our gold conference!
Or you can just buy shares of Seabridge… It's a better deal today than it was two years ago…
Good investing,
Steve
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