Gold prices reached a record high earlier this month, topping $1,900 an ounce amid the eurozone debt crisis and other global economic fears.
While the investor rush to own gold has bid the physical metal’s price to record new highs, gold mining stocks have severely lagged this move. According to the Wall Street Journal, mining stocks are trading at only 2.4 times book value and at one of the lowest recorded ratios to gold prices.
In a recent commentary on the potential gold stock boom, Lawrence Williams of Mineweb wrote, “Good management, strong finances and, of course an exciting, and big, gold find in a politically stable area…can provide remarkable opportunities.”
One junior miner that has all of the above—and whose shares currently trade at bargain-basement prices–is Andover Ventures Inc. (TSX-V: AOX) (OTCPINK: AOVTF). AOX holds interests in a 17,890-acre project in northwestern Alaska’s resource-rich Ambler Mining District and four projects spanning 16,000 acres in Utah’s historic East Tintic Mining District.
The Company’s Sun deposit in Alaska’s Ambler district has an estimated $8 billion of copper and silver reserves and is believed to be the second-largest known deposit within the district after NovaGold Resources’ (NYSE Amex: NG) Arctic deposit. AOX recently announced the final results from its 2011 drill program at the Sun deposit, and the significant intercepts from Sun11-28 have led geologists to believe they have pierced the vent.
For investors that are unfamiliar with the importance of having possibly pierced the vent, one just needs to look at the success of Teck Resources Ltd.’s (NYSE: TCK) Red Dog Mine. Red Dog has the world’s largest zinc reserves and is currently the world’s largest producer of zinc. The vent and the area surrounding it has accounted for approximately 80% of the zinc mined to date on the property.
The next step at the Sun deposit will be to further define the “Hot Zone” of the property during the Company’s 2012 drilling, expanding on the 76 holes (approximately 49,000 feet) that have already been drilled on the property.
While AOX continues to make great strides on what looks like a monumental find in Alaska, its work in the historically prolific East Tintic Mining District of Utah is expected to produce near-term revenues. AOX plans to begin production this fall at the Trixie mine, a gold and silver mine in the East Tintic district that is expected to produce 5,000 ounces in its first full year of production and 20,000 ounces of gold annually within three years. Trixie is in a unique position to ramp production quickly thanks to a stockpile of material from the previous operator that is already on the surface waiting to be processed. Combine that with a historical cost of production of less than $125 per ounce, and you can see the huge potential profit opportunity.
The cash flow generated by the Trixie mine will be used to fund the Company’s other exploration projects, including the Big Hill project in Utah, on which AOX is partnered with mining giant Rio Tinto Plc.’s (NYSE: RIO) Kennecott division.
Investors that were late to the gold party still have a chance to win big with AOX. It’s extremely rare to find a junior with such enormous upside potential that is also entering near-term production – especially at these types of prices. Don’t miss your chance to cash in on the gold bull.
To hear more about the AOX story, please take a moment to view their presentation from the August RedChip virtual conference.
Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.