Maybe The Best Gold Stock You Never Heard Of

I've always held a deep respect for the thorough discounting efficiency of the stock market. In fact, my main analysis method depends heavily on it. So I tend to sneer at the "undiscovered gem" approach - "Oh, the market has discovered it, fool, and it knows more about it than you do" is my reaction. So, it is with a sense of uneasiness that I present to you an undiscovered gem.

Sante Fe Gold SFEG seems to be such a gem. It most certainly is undiscovered. Even amongst the small juniors, it is about the most unheard of, stealth gold stock priced above $1 I have ever run across. About the only people grabbing at it are the insiders, and they really like it. At an IH (insider held) factor of 35%, it is the 3rd most heavily insider held gold stock I have found (behind GORO and BVN) among the 60 or so I track that trade on US exchanges. And it's all officers who own, not funds or other companies, and some of the heavy handed buying has been just in the last year or so.

About the only hoopla one finds is some write-ups at investor village wherein they explain:

And how did all this come to be? Essentially it has been borne out of an extremely conservative management style intent upon under-promising and over-delivering, that with little fanfare has been quietly and methodically acquiring additional properties at every opportunity, that not only hold great value already, they also hold additional superb upside discovery potential and at the same time sought to downplay expectations with initial extremely conservative projections based on $650 - $850 Gold prices along with conservative output projections and the prospect of better than expected grades, that might actually have a much better than expected impact, not only on the initial Gold and Silver output projections, but also on the bottom line due to what might be larger cost savings, along with a multiple increase in production, that has basically set the stage for an unexpectedly large increase in revenues, that a short time ago, did not even seem remotely possible even to us: And so now it appears as if the impending prospects of all this has certainly vindicated our judgment and decision to select SFEG as our preferred means of investing in Gold and Silver, with perhaps among the most upside leverage and potential for the coming year and early in this decade as we attempt explain further and offer some background as to how we came to this decision quite some time ago.

And because we've had experience of this before, when we were able to identify extremely undervalued positions in both mining and other issues that were able to gain exponentially from similar, albeit much lower multiplier effects that still turned out to be very successful investments. With our track record of identifying ahead of time and capturing much of half a dozen up to 100 fold mega-winners this past decade We honestly have not seen a better, clearer or more easy to project so well ahead of time situation than Santa Fe Gold and re-iterate: Very few times in life are you ever likely to be faced with the prospect of being able to gain from a multiplier effect that you can see so clearly ahead of you especially any financial or investment multiplier because as you continue to evaluate Santa Fe's prospects

The average cash cost of production in the industry is about $580/oz for gold. I've seen figures of around $250 and $300-$400 projected for Sante Fe. It's been tabulated that M&A pricing metrics, as shown by the recent Andean Resources buyout, puts SFEG's current $1 stock at $36 by the same reserve oz valuation.

In support of all this, 26 institutions considered Santa Fe to be a compelling enough investment proposition at $1.30 per share earlier this year and SFEG reached a high of $1.74. Therefore, since the fundamentals of the company are already substantially better today than they were then, with increasingly strong revenue growth forthcoming, Santa Fe would appear to be a rare and uncommonly undervalued and opportunistic anomaly in the current marketplace, in particular when compared with its peers.

And with an additional 65 institutions or so that have either met with management personally, or by phone conferences and are now monitoring Santa Fe in expectation of an AMEX listing before too long, as Santa Fe continues to execute and potentially over-deliver, a real buying stampede in this issue could ensue, especially as important resistance numbers are taken out on the upside and most importantly, once new 52 week highs are reached and beyond new all time highs. And in addition to all of this, the company has already stockpiled more than a year's worth of production, presumably with all the intent to compress more than two years production into one and ultimately, ramp up in multiples of 400 tons per day sooner than anticipated, thus affording them a head start towards increasing to 1,000 tpd plus and very significant revenue growth.

Sometimes it takes the marketplace time to factor in all of the information at hand and much of what is written above may not yet have been assimilated by all investors, but a few are beginning to get the memo and increasing numbers could begin to realize just how truly undervalued Santa Fe really is that at some point could create a rush on the stock and a bottleneck situation where demand for stock would overwhelm supply

I've read a lot of complaining about the company's public relations efforts (or lack thereof). But they may be trying to fix this starting with an investor conference call this Friday. All of Sante Fe's operations are in the Southwest US and do not involve any geopolitical problems (unless Obama nationalizes the mining industry). Technically, the stock looks pretty interesting:


It has made much higher levels since mid '08, which is more than you can say for almost all the miners - a nice sustained uptrend that correlates well with the gold moves. It looks to be organizing for another sling shot move up with the current gold move: