Against a backdrop of political and economic uncertainty, this has been a good year for gold bulls. Following the election of Donald Trump, a further jump in the price of the yellow metal hasn't occurred as many predicted, but as febrile markets have shown repeatedly in the past few months, there are still myriad reasons to believe that gold producers will continue to do well at $1,250 (£990) an ounce. But even if interest in the haven asset does fall off a cliff and the gold price drops considerably, we think Aim minnow Mariana Resources (MARL) is worth a look.
- World-class grades
- Expanding resource base
- Takeover target
- Low prospective cash costs
- Partner risk
- Uncertain funding structure
This conviction is based on a relatively simple trading idea. As the balance sheets of Randgold Resources (RRS), Acacia Mining (ACA) and Centamin (CEY) attest, this year's gold run has left many of the world's larger miners with mounting cash piles. But with a paucity of major discoveries in recent years, their options have largely been constrained to increased dividend payments and exploration work of their own. Mariana, which thanks to its dual listing in Toronto is also on the radar of North American miners, is the sort of company its larger peers should be looking at.