M Partners’ Derek Macpherson Found Three Resource Companies that Have Done the Impossible—Increased in Value 30% This Year

The Gold Report: Can you tell us about several companies that you cover that are up substantially year-to-date?

Derek Macpherson: Kirkland Lake Gold Inc. (KGI:TSX), Klondex Mines Ltd. (KDX:TSX; KLNDF:OTCBB) and Integra Gold Corp. (ICG:TSX.V; ICGQF:OTCQX) are all up more than 30%, with Kirkland up almost 70%. We pick companies that are undervalued and have the ability and the necessary catalysts to move higher and close the valuation gap.

TGR: What are the key differences between those companies that are moving higher and the others that are flat or lower?

DM: Companies need to change the story or have good news. That’s key. For example, Kirkland Lake is in the process of changing its story. The company is turning around its operation, and is starting to generate free cash flow. That’s helping to drive that stock higher, improving its relative valuation.

TGR: Kirkland Lake has a relatively new CEO. What are some qualities you want in a junior mining CEO?

Integra Gold Corp. is one of our favorite development assets in Canada.

DM: There is a basket of qualities we look for. I don’t think that any one quality is critical, but they all need to be there in varying degrees. First, with a junior mining or development company CEO, you want solid technical expertise. Lacking that, CEOs should surround themselves with good technical people. Second, you need a CEO who not only intimately knows the company’s story but also is passionate about it and can communicate that passion. Third, they should be able to present the story in a formal setting but also one-on-one with investors. And, finally, a junior mining CEO should have a good understanding of capital markets and how to get things done in capital markets—that can be …read more

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