6 Junior Miner Stocks to Watch

NEW YORK ( TheStreet) -- Keegan Resources ( KGN) and Extorre Gold Mines ( XG) are among the six junior mining companies that analysts expect to make solid gains in the coming 12 months, according to Bloomberg.

Junior miners explore reserves for their bigger peers.

These stocks have already risen handsomely in the past month on the back of rising gold prices, as reflected by a 19.1% increase in the exchange-traded fund that tracks the sector, the Junior Gold Miners ETF ( GDXJ).

Analysts expect these six junior mining stocks to generate lucrative returns over the next 12 months. Analysts' average price targets for these stocks range from 10% to 180%, and none of the stocks have any sell ratings.

The stocks are listed based on increasing upside according to analysts' price targets.

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6. Extorre Gold Mines is a Canada-based company focused on working on the bonanza-grade Cerro Moro Project in Argentina's Santa Cruz Province.

Extorre owns all of the Cerro Moro gold-silver project, but the Santa Cruz Government Mining Company, Fomicruz, is entitled to a 5% interest in the project on completion of mine permitting.

Extorre recently reported the closing of a private placement financing through which it issued 2.4 million shares at $11.1 per share for gross proceeds of $26.7 million. The net proceeds from the placement will be used for the exploration and development of its properties in Argentina and for general working capital purposes.

Looking ahead, the company's chief executive said that Cerro Moro's ideal geographic location and very high-grade gold-silver veins would help it achieve near-term, low-cash-cost gold-silver production from a relatively modest capital investment.

Of the seven analysts covering the stock, three rate it a buy and the others rate it a hold. There are no sell ratings on the stock. On average, analysts polled by Bloomberg expect the stock to gain 10.3% to $15.61 in the coming 12 months.

5. Taseko Mines ( TGB) is a Canada-based junior mining company. It operates the Gibraltar Copper Mine and is exploring the Prosperity Gold-Copper, Harmony Gold and Aley Niobium properties.

The Gibraltar Mine reported unaudited production results for the second quarter of 2011. For the quarter, Gibraltar produced 20 million pounds of copper, compared with 19.2 million pounds in the first quarter of 2011, and 300,000 pounds of molybdenum.

The company's chief executive says that after a capital outlay of $325 million on the Gibraltar Development Plan 3, the mine's annual production capacity will increase by 90% to 180 million pounds of copper, and by 70% to 3 million pounds of molybdenum.

For the first quarter of 2011, Taseko recorded adjusted earnings of $10.8 million, or 6 cents per share, representing a 48% increase from the first quarter of 2010. Cash margins increased 34% to $2.21 per pound for the same period, driven by higher copper prices. The company has purchased put options on almost 90% of its 2012 copper production, which ensures a minimum selling price of $3.50 per pound and revenue for the next 18 months.

Of the 10 analysts covering the stock, six rate it a buy and three rate it a hold. On average, analysts surveyed by Bloomberg expect the stock to gain 56.3% to $7.35 in the next 12 months.

4. Keegan Resources acquires and explores mineral resources in West Ghana, Africa. Its principal properties are the Asumura and the Esaase projects, and the company hopes to advance the latter project to commercial development. It also holds a portfolio of other Ghanaian gold concessions in various stages of exploration.

During fiscal 2011, Keegan acquired a 100% interest in the 10.4-square-kilometer Dawohodo prospecting concession from a private Ghanaian company for $1.1 million. The acquisition provides additional land that can be used in the development of the Esaase project.

The company recently announced the latest assay results from the Esaase project. It said it has encountered significant gold intercepts in its resource infill-drilling program, and the company's chief executive said that these new drill results indicate strength and consistency of mineralization in the current resource and strong potential from exploration of new zones. Currently, Keegan has almost 88 drill holes pending assay and intends to continue its aggressive development and exploration drill programs.

Of the six analysts covering the stock, five rate it a buy and the rest rate it a hold. There are no sell ratings on the stock. On average, analysts polled by Bloomberg expect the stock to gain an average of 56.4% to $25.85 over the next 12 months.

3. PolyMet Mining ( PLM), a development-stage company, explores and develops natural resource properties. The company's sole mineral property is the NorthMet Project, a polymetallic deposit located in northeastern Minnesota. The NorthMet property extends across 25.9 square miles and comprises two areas: the NorthMet site totaling 6.5 square miles of leased mineral rights; and the Erie Plant site totaling 19.38 square miles of freehold land. The company also owns a large processing facility, a tailings disposal facility and extensive associated infrastructure.

For the first quarter of 2012 ending April 30, 2011, Polymet reported cash and cash equivalents of $5.91 million. During the three months, the company invested $2.914 million in its NorthMet project. Loss per share stood at 1 cent.

Recently, PolyMet closed the second tranche of its previously announced private placement with Glencore by issuing five million common shares of the company at $2 per share for total net proceeds of $10 million.

Separately, Glencore has acquired 9.2 million shares of PolyMet at a price of $1.4233 per share from Cliffs Erie. Overall, Glencore now owns 17.89% of the common shares outstanding of PolyMet.

The two analysts covering the stock rate it a buy and have an average price target of $3.00, implying the stock could rise 77.5% over the next 12 months.

2. NovaGold Resources ( NG), a precious metals company, explores and develops mineral properties through its subsidiaries, partnerships and joint ventures in Alaska, the U.S., British Columbia and Canada.

With a major focus on gold properties, NovaGold holds interests in copper, silver and zinc resources and a few exploration-stage properties. The company's portfolio of assets includes 50% interests in two undeveloped gold and copper-gold projects, Donlin Creek and Galore Creek, and 100% of the Ambler copper-zinc-gold-silver deposit located in North America.

Teck Resources ( TCK) and NovaGold recently announced significant progress of the prefeasibility study on their Galore Creek copper-gold project in northwest British Columbia, with completion expected by the end of July.

NovaGold will also complete further, environmental and engineering works in preparation for feasibility level studies on the property. The Galore Creek project contains measured and indicated resources of 8.9-billion pounds of copper, 7.3-million ounces of gold and 123 million ounces of silver.

The net loss for the second quarter of 2011 narrowed to $10.6 million, or 3 cents per share, from $16.8 million, or 7 cents per share, in the year-earlier quarter. The company recorded cash and cash equivalents of $111.6 million and working capital of $108.0 million, as of May 31.

Looking ahead, the company expects to release the Galore Creek pre-feasibility report by the end of July, while the Donlin Gold feasibility study would be completed in the fourth quarter of 2011.

Exploration plans for 2011 include drilling at the Ambler and Galore Creek projects. Initial drilling has started at the San Roque project in Argentina, and Phase II drilling is expected to start later in 2011.

For the third quarter of 2011, the Donlin Gold project has an approved budget of $7.3 million, while NovaGalore expects to spend $8.3 million at the Galore Creek. Similarly, Ambler and Rock Creek projects have budgets of $4.6 million and $3.9 million, respectively.

Of the four analysts covering the stock, two rate it a buy, and two rate it a hold. There are no sell ratings on the stock. On average, analysts polled by Bloomberg expect the stock rise 80% to $18.63 in the coming 12 months.

1. Seabridge Gold ( SA) is a mineral exploration company engaged in acquiring projects with gold resources in North America, and expanding and verifying these resources through further exploration.

The company also undertakes engineering work required to move these resources to reserves and determines their economic value. With principal projects in Canada, it holds six properties with gold resources, and its material properties are the KSM Project and the Courageous Lake Project.

The company recently said it achieved continued drilling success at its sulphurets deposit. Results from the first seven core holes drilled at the deposit could expand reserves and enhance the project's overall economics. Seabridge says the program is designed to upgrade almost three million ounces of higher-grade inferred gold resources at the Sulphurets and Kerr deposits to proven and probable reserves this year. These resources are currently graded as waste in the 2011 Preliminary Feasibility Study.

Late June, in a private placement program, Royal Gold purchased 1.02 million common shares of Seabridge at $30.39 per share, indicating a 15% premium over the volume weighted average trading price of SA's shares for the five-day trading period ending June 14.

Golden Predator and Seabridge Gold recently agreed to contribute an industry-leading portfolio of U.S. gold assets into a separate company called Wolfpack Gold from which they would earn minority interests.

To advance their Canadian assets, both companies have decided to transfer five advanced stage and development properties to not only create value from undervalued assets but also to build a premier gold exploration and development company with its principal projects in the leading gold district of Nevada in the U.S.

All three analysts covering the stock rate it a buy. There are no sell ratings on the stock. On average, analysts polled by Bloomberg expect the stock to gain an average of 180.4% to $82.09 in the coming 12 months.