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April 12, 2009

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Melrune


Hello Doug,

I`m a fellow software engineer that has taken an interest in the stock market in general. I was not too knowledgeable with gold or mineral related junior companies but I`ve learned quite a bit from your post.

I've recently taken an interest in a relatively new and small company in the gold sector name Gold Wheaton. It is modeled on the successful Silver Wheaton company and seems to have interesting prospect.

Cash flow in 2010 should be equal to 4 times current market value (but now they have about 125M USD in cash to make other royalties deal that is not included in the current cashflow forecast). This compare quite well to other royalties base type of company. Peer include Franco-Nevada at 15+ CF, Royal Gold at 20+ CF, Silver Wheaton at 11+ CF and Silverstone Resources at 4 time Cash Flow value.

Interestingly enough, the only other peer company trading at a similar cash flow level "Silverstone Resource" was recently acquired by Silver Wheaton.

Since I`m not a specialist at putting a fair value on this, I can only speculate that their next gold royalty acquisition should add about at least 20M USD of cash flow and would then bring the cash flow ratio for 2010 to (total of 80M USD Cash Flow) 3 which then compare quite well to many of your Junior Cash flow table above.

On the risk level, since this cash flow would come from a diversified sources of company (well maybe 3), risk should be considered lower than most of the current junior miner of your list.

Please let me know what you think, I would really appreciate to get another point of view on this company.

Regards,

Melrune

Ruud

Hello Doug,

I want to thank you enormously for your time and your clear explanation to the questions that i asked you.

Looks like the gold price is ready to rumble this morning. :)
Go gold go gold!!

Kind Regards,

Ruud from The Netherlands

Gold Stock Strategist

Doug,

This is a great post! Comments I strongly agree with include, "So, firstly, you don't want to invest like me." and "Nobody cares about your money the way you do." Self-directed investing is a personal journey, with gains and losses along the way as we learn. And investments that may be right for one person and their financial situation may not be right for another person. I really like the way your junior gold miners list is expanding and introducing those of us interested in the sector to new companies and different perspectives. Thanks! Best. Scott

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