Andover Ventures: A Mining Stock with a Major Near-Term Catalyst

Investors’ wildly bullish sentiment toward gold, which characterized much of 2011, was more subdued as the year came to a close. After reaching an all-time high of $1,900 per ounce in September, gold prices consolidated for the remainder of the year. Despite the fourth-quarter pull-back, gold marked its 11th consecutive year of gains. A number of analysts forecast higher gold prices in 2012.

No matter how gold performs in 2012, investors still have an opportunity to profit from the precious metal by investing in Andover Ventures Inc. (TSX: AOX.V) (OOTC: AOVTF), a Canadian junior miner with a tremendous near-term catalyst. AOX plans to start production in the coming months at its Trixie Mine in Utah’s Tintic Mining District. The mine previously produced approximately 200 tons per day of gold and silver ore, and the previous operators left a stockpile of material on the surface waiting to be processed. These surface materials total an estimated 4,500 ounces of gold and 38,000 ounces of silver. Assuming current metal prices and a 90% metal recovery, this would translate into revenue of approximately $7.5 million from the surface material alone.

Back in late 2001 and early 2002, the cost of production at the Trixie mine was less than $125 per ounce of gold. Given the increase in gold production costs over the past decade, production costs at the Trixie Mine would probably be around $475 per ounce today. Even if the price of gold fell another 50% to $800, Andover would still reap a 68% return on its production costs—a substantial profit.

AOX will use the cash flow generated by the Trixie mine to fund the Company’s other exploration projects, including the Big Hill porphyry copper-gold-molybdenum project in Utah, on which AOX is partnered with mining giant Rio Tinto Plc.’s (NYSE: RIO) Kennecott division. Kennecott began drilling on the Big Hill deposit in August. AOX also recently more than doubled its footprint at its Sun property in Alaska’s mineral-rich Ambler District. The Sun property sits adjacent to NovaGold’s (NYSE Amex: NG) main deposit.

Andover’s share price doesn’t even come close to reflecting the value of its properties. The commencement of production at Trixie could cause Andover’s shares to appreciate significantly in the coming months, generating strong returns for those who invest at the current low valuation. To learn more about Andover and its properties, you can view the Company’s presentation from our latest virtual conference or read RedChip Research’s initial report on AOX.

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.