5 Gold Mining Stocks Under $5

NEW YORK (TheStreet) -- Gold miners Great Basin Gold (GBG), Rubicon Minerals (RBY), Northgate Minerals (NXG), Brigus Gold (BRD) and Richmont Mines (RIC) are all trading under $5. Analysts estimate these stocks have a minimum upside of 46%, so this is an attractive buying opportunity for investors.

In its latest research report, Casimir Capital says it's time to buy gold and forecasts a strong year for gold and junior gold stocks during 2011. Gold prices increased nearly 29.7% to $1,421 per ounce during 2010, rising for the ninth consecutive year. Looking ahead to 2011, GFMS expects gold prices to breach the $1,500 mark and cross the $1,600 mark by late 2011. Therefore, rising gold prices will power gold stocks higher and attract investors' attention to the metal and stocks.

In comparison to intermediate and major gold companies, junior gold shares are likely to outperform, as they are set at lower valuations and are likely to grow significantly as valuation rises. Moreover, major gold companies can only seek a fraction of the available properties, as they need larger projects to continue their operations. On the other hand, not only will a new discovery impact junior gold, but also junior gold companies can purchase used mills at discounts.

The stocks are stacked based on upside, great to greatest.

Great Basin Gold is engaged in the acquisition, exploration, development and trial mining of precious metal deposits within two material projects -- Hollister gold project and the Burnstone gold project, which is at the trial mining stage. All the analysts covering the stock recommend a buy, with consensus estimates indicating a 59.8% potential upside over the coming few months. The stock was trading at $2.69 Friday morning.

For the fourth quarter, the company's Hollister gold project reported a production increase of 31,000 gold equivalent ounces, compared to 11,000 ounces in the third quarter. Cash costs fell 20% to $680 per ounce from the earlier quarter. On an average, daily production at Hollister has increased to 325 tons from the initial 275 tons.

As per a research report, MLV estimates Great Basin to report fourth-quarter net income of C$1.9 million, as opposed to a loss of C$0.7 million in the year-ago quarter. Average metallurgical recovery at the Burnstone gold project stands at 86% and is likely to reach 95% as the plant ramps up and higher-grade material is processed. The company expects to reach commercial production by the end of January 2011. During the first quarter of 2011, GBG will recognize the revenue for the 3,500 gold equivalent ounces delivered to the refinery during 2010.

Rubicon Minerals is a development-stage company engaged in the acquisition and exploration of mineral property interests in Canada and the U.S. Rubicon explores for commercially viable gold and metal deposits. Besides Phoenix Gold Project (Ontario) and other mineral exploration assets, the company has acquired land packages in Alaska and Nevada. Of all the analysts covering the stock, 67% recommend a buy. Analysts' consensus estimates indicate a 70.6% potential upside over the upcoming few months. The stock was trading at $4.95 Friday morning.

During November 2010, the company announced the discovery of a 4 million ounce gold resource in the prolific Red Lake mine in Canada. This catapults Rubicon into the league of the world's biggest gold producers, as only 7% of the world's gold deposits contain 3 million ounces or more. Potential ounces at this gold system could range between 13 million and 16 million ounces, positioning Rubicon as a top-notch gold company.

Meanwhile, the company is also on the verge of developing a mine on the Phoenix deposit, with the preliminary economic assessment report under preparation. Recent drilling results at Phoenix were encouraging, with intercepts both within and outside the 9 times target area, which is host to existing resources. This validates the long-term deposit potential, supporting rising share price movements. Rubicon is scheduling first production by the fourth quarter of 2012, transforming from an explorer into a producer.

Northgate Minerals, is a Canada-based gold and copper producer with operations, development projects and exploration properties in Canada and Australia. The company's mining assets include Kemess, Fosterville, Stawell and Young-Davidson. Of all the analysts covering the stock, 67% recommend a buy, while the remaining suggest a hold. Analysts' consensus estimates indicate a 75.3% potential upside during the upcoming few months. The stock was trading at $2.59 Friday morning.

For the fourth quarter, the company reported a production of 66,077 ounces of gold, or 272,712 ounces for full-year 2010. Meanwhile, fourth-quarter sales came in at 70,145 ounces of gold and 12.4 million pounds of copper. Looking ahead to 2011, the company's aggressive $14.5 million exploration program will focus on some exciting discoveries in 2010. Furthermore, during 2012 and 2013, Northgate sees production increasing with significantly lower cash costs.

During 2011, Northgate is seeking to ramp up production at its Stawell Gold Mine by spending almost $13 million on new equipment and $26 million on mine-life extension. For 2011, 2012 and 2013, it sees production at 90,000 ounces, 110,000 ounces and 117,000 ounces, respectively, as compared to 71,482 ounces in 2010. Besides, the company is also looking forward to adding 12,000 ounces of gold and 5.3 million pounds of copper before the closure of its Kemess South mine in March 2011.

Brigus Gold is engaged in gold mining, exploration and development, including the extraction, processing and related activities. The company also owns an open pit and an underground mine, Black Fox, in Ontario, Canada. The three analysts covering the stock recommend a buy rating with the average consensus estimate indicating a potential upside of 77.5% in the upcoming few months. The stock was trading at $1.63 Friday morning.

The company's recently reported third-quarter results that were the best quarter for overall operating performance since production started at Black Fox in May 2009. Looking ahead into the fourth quarter, production is seen ranging between 16,000 and 19,000 ounces, primarily because of reduced pit production. For 2010, the company expects cash costs to remain relatively unchanged from the 2009 levels, between $550 and $600 per ounce.

Going ahead, Brigus is expected to raise its underground production target from 800 tonnes per day to 1,100 tonnes per day by the end of 2011. Meanwhile, ores from the underground portion of Black Fox mine are expected to be shipped to the mill in early 2011. Brigus sees production to range between 102,000 and 112,000 ounces of gold at a total capital expenditure of $26 million. Meanwhile, it is also seeking to develop the Goldfield project into a producing gold mine within the current development schedule, as early as 2013. The conversion process should be completed by June 2011, and should augment production by more than 70,000 ounces in the first year.

Effective January 2011, the company has announced plans to eliminate 100% of its forward gold sales contract obligations, thereby benefiting from the sale of its Black Fox Mine gold production at spot prices in the future.

Richmont Mines, a Canada-based company, is involved in the acquisition, exploration, operation, financing and development of mineral properties with major interests in Beaufor Mine in Quebec, Island Gold Mine in Ontario and Louvem Mines. Besides, it holds interests in many mining properties at different stages of exploration. Four analysts covering the stock recommend a buy rating, with the average consensus estimates indicating a potential upside of 88.7% in the upcoming few months. The stock was trading at $4.40 Friday morning.

The company recently declared that its 2010 gold sales increased 14% year-over-year to 68,123 ounces, up 5% from the forecasted 65,000 ounces. On a segmented basis, Beaufor Mine sales escalated 18%, while the Island Gold mine was up 7%. Meanwhile, fourth-quarter gold sales increased 43%, compared to the same period a year ago. Additionally, the company has a strong balance sheet, with $38 million in cash, no debt and no gold hedged forward.

Looking ahead, the company foresees annual gold production in 2011 to come in between 80,000 and 85,000 ounces. Of this, Francoeur mine will contribute 15,000 ounces, with 5,000 ounces produced before the mine begins commercial production in mid-2011. In 2012, when the mine begins full-fledged production, Richmont's annual gold production is seen crossing 100,000 ounces.

>To see these stocks in action, visit the 5 Gold Mining Stocks Under $5 portfolio on Stockpickr.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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