E Three Exposures To Small Cap Gold With Varying Risk Profiles

To summarize – both Global X Explorers and MV Junior Gold offer a relatively low risk exposure to the junior gold space, with the former the higher risk, higher reward out of the two.

Junior Miners

A direct exposure is a risky allocation, but has a large potential upside if a position is taken before production starts. A good example at right now is Pilot Gold Inc (TSE:PLG)(PLGTF). Pilot has three primary properties – two in the US and one in Turkey. Its strategy is to identify what in the industry are referred to as sweet spots – regions that are underexplored or as yet unexplored, which lie close to proven resources.

Its two US-based projects are located in Nevada and Utah - Kinsley and Goldstrike respectively - just off the Eastern Great Basin shelf. This latter mentioned shelf has produced a number of successful mines, including Bald Mountain, which is owned and operated by Franco Nevada Corp (NYSE:FNV) and has produced more than 10 million ounces of gold to date, and Newmont Mining Corp’s (NYSE:NEM) Long Canyon, which has produced more than 3 million ounces to date.

The Turkey-based projects include two resources, one called Halilaga and the other TV Tower. These are part owned properties with a history of production, and are located in one of the mist historically rewarding gold regions in Turkey.

The reason Pilot Gold is attractive is its timeframe – the company is set to announce resource estimates from its two US projects before the end of the year, and this should help to cement a market value going forward. Aggressive drilling programs in both Nevada and Utah have already showed some positive deposit results, and if the company can build on these before the close of the year, it should have plenty of upside potential.

Of course, this is a risky exposure. It’s direct, and in an as-yet not producing company. The above mentioned explorer ETF includes a host of these sorts of companies, and as such, would probably be a better option for an investor looking for a risk mitigated exposure to exploration. As a small scale speculative allocation, however, it might be worth considering.

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Comments

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Alexa Cress 5 years ago Member's comment

Very Interesting that the turkey based project is on high demand.

Ross Gritner 5 years ago Member's comment

This was pretty instructive. Do you have more information about the Turkey-based project?

Sarah Angelo 5 years ago Member's comment

Interesting that the Global X allocation is the riskier of the two funds, good to know.

Danny Straus 5 years ago Member's comment

Agreed.