AUY - 3 Penny Stocks To Watch As Gold Prices Rally In October 2020
Will These Gold Penny Stocks Follow Gold Higher In October?
Gold penny stocks have been some of the most popular companies to watch in the past few months. With political turmoil in the U.S. and COVID running rampant, investors have continued to turn to gold stocks. There are a few reasons why this is the case. For one, gold stocks tend to be quite stable through geopolitical events. This is because gold is historically a store of wealth especially during times where rates are low. Although gold stocks have shown big gains in the past six months, many investors choose them for their stability.
Second, gold stocks usually show gains in the inverse of the market. When there is uncertainty in the broader stock market, gold tends to rise substantially compared to other asset classes. Furthermore, when gold is in a bullish trend, gold penny stocks tend to outperform their higher-priced counterparts.
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This means that both institutional and retail investors can take a crack at the gold mining sector. In addition, gold has been correcting in the past two weeks, leading to many investors viewing it as below market value. However, during the end of September and into October, gold prices have been back on the rise. It’s not as aggressive (right now) as it was back in July however, it is a noticeable trend amid recent market uncertainty. Will any of these gold and mining penny stocks be on your list in October?
Gold Penny Stocks to Watch: Freeman Gold Corp.
Freeman Gold Corp. ( FMANF Stock Report ) ( CSE FMAN ) is one of the small-cap gold stocks to watch recently. The company is a part of the junior gold mining niche due to its market cap. But, there’s nothing small about its operations. The company has been focusing on the Lemhi Gold Mine, based in Lemhi, Idaho.
The Lemhi Project is comprised of 99 unpatented claims and 11 patented claims subject to certain existing encumbrances, which have over 10,000 meters of historic drilling. Of the 99 unpatented claims, 53 are owned directly by Lower 48 and 46 optioned claims are held subject to an agreement with BHLK-2 LLC. Last year, Idaho was ranked as No. 8 in the world by the Fraser Institute in terms of its mining attractiveness. Since the start of this project, Freeman Gold has worked tirelessly to de-risk the asset.
In late, Q3, Freeman also acquired and extinguished a back-in right from Yamana Gold Inc. ( AUY Stock Report ) over the Lemhi Project in consideration of the issuance to Yamana of 4,035,273 common shares of Freeman. This represents 5% of Freeman’s issued and outstanding shares. Not only does the transaction remove the existing back-in agreement on five of Freeman’s patented claims, but it also brings in a Leading Gold Producer as a significant shareholder of Freeman Gold. The transaction also further de-risks the Lemhi project and frees it of all back-in rights.
With the Lemhi Project, Freeman Gold recently announced that it had begun a 5,000-meter diamond drill program at the site. This drill program will help to confirm the past data that is comprised of 355 historical drill holes at the project. These drill holes should serve to show how much gold there could be at these particular cites at Lemhi. With this information, Freeman Gold could be on the list of gold penny stocks to watch this month.
Gold Penny Stocks to Watch: New Gold Inc.
New Gold Inc. ( NGD Stock Report ) is another one of the gold penny stocks to watch recently. As of late 2020, the company reportedly has mines and operations in Canada and Mexico. These mines include the Rainy River Gold mine in Ontario, CA, the New Afton gold mine in British Columbia, CA and the Cerro San Pedro gold mine in Mexico.
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After announcing that it has been working to improve its balance sheet substantially, the company has since seen a great deal of bullish sentiment in its trading. The company stated that it is selling its Blackwater mine to Artemis Gold for around $142 million.
In addition, the company has stated that it will be selling around $400 million in senior debt notes that won’t be due for the next 6 years or so. As stated earlier, capital is crucial to mining companies expanding. In addition, the price of gold has continued to rise in the past six months, which New Gold has been able to take advantage of.
Since mid-March, shares of New Gold Inc. have shot up by a staggering 230% or so. Because of this, many bullish investors have taken note of the company. Analysts have also taken note. Mid-September saw CIBC upgrading New Gold to Outperform from Neutral. The firm also boosted its price target on NGD stock. Previously, it held a target of C$2.48. Last month, that was increased to C$3.43.
Mining Penny Stocks to Watch: McEwan Mining Inc.
McEwan Mining Inc. ( MUX Stock Report ) is a producer of gold and silver operating in several countries around the world. With its focus on gold production in the Americas, McEwan Mining has worked to become a leader in the gold mining industry. The company recently announced that it had engaged in a bought deal private placement worth around 6.29 million shares of the company. With this, it should be able to raise roughly $10.4 million. This money should go straight to the expansion and exploration of its mining properties located in the Timmins region.
While shares of MUX stock declined during the last few weeks of September, the last week has been less bearish. Since September 24th, shares have climbed back by as much as 18%. At the end of September, the company also welcomed a new CFO, Anna Ladd-Kruger, CPA. She was most recently the CFO at Excellon Resources focusing on the turnaround of their corporate team.
“I’m very pleased to welcome Anna Ladd-Kruger to McEwen Mining . Anna is an experienced and innovative leader with broad global experience and a proven track record of leading strong finance teams,” commented Rob McEwen, Chairman and Chief Owner.
Similar to New Gold, analysts have grown bullish on MUX stock. Roth Capital and HC Wainwright both have Buy ratings on McEwen with price targets of $2 and $2.50 respectively.