GOLD sells for approximately $120 per share on NASDAQ. PVG sells for around $13 per share on the NYSE. Which gold stock is the better bargain?
Randgold Resources (GOLD) is an African exploration and gold miner with 16.3 million ounces in proven resources operating within an unsecure mining situation. Pretium Resources (PVG), with proven management is a Canadian exploration and gold & silver mining company with over 30 million ounces of gold plus 50 million ounces of silver in measured and indicated gold resources located in secure British Columbia. I expect PVG to go into limited production within 2 years and full production within 5 years (in my opinion). GOLD sells for approximately $120 per share on NASDAQ. PVG sells for around $13 per share on the NYSE. Recent drilling results for PVG have shown as much as 45,000 grams of gold per ton in the Valley of the Kings zone. This is one of the highest grades of gold ever drilled world-wide in recent memory.
GOLD pays an annual dividend of 40c per share per year. PVG does not pay dividends yet since they are not yet in production. GOLD annual EPS is about $4.72. PVG has no earnings yet. Based upon my latest calculations PVG could earn in excess of $18 per share once in full production within 5 years. Using the same PE ratio of GOLD (25), I estimate that PVG’s price potential could reach $450. I believe that PVG is dramatically undervalued with the potential to rise in price by a factor of 34 times its current selling price on the NYSE. In addition, with a short interest of approximately 1 million shares, this short squeeze should be something to behold! The time for PVG’s rise could be very close. I expect the shares of PVG to rise after this pre-election sell-off has run its course. GOLD appears to be fully priced at current gold prices and will only go up $ for $ with gold prices. PVG can go up 34 times in price from here and then go up $ for $ with gold prices. A spread might make sense; long PVG and short GOLD or own PVG outright.
All the best, with continued shine and glitter in your lives!
Ed Sheldon CPA(retired)