Ben Kramer-Miller, chief analyst at miningWEALTH, profiles Sarama Resources, which he believes is an undervalued explorer run by a world-class exploration team.
Resource speculators like exploration companies run by teams that have had success in the past who are exploring in highly prospective areas. The problem is that this preference leads to exploration stocks with this perceived quality being bid up to lofty valuations that appear to be pricing in meaningful resource expansion. The 2016 run-up in gold stocks has seen a lot of this. This shouldn’t necessarily be a deterrent for investors, but by the same token it begs the question: Are there any cheap exploration companies out there run by world-class exploration teams?
We believe that Sarama Resources Ltd. (SWA:TSX.V) is such a company. Sarama Resources is a stock that we recommended to subscribers back in April, and while shares have risen the value proposition remains compelling. Meanwhile, Sarama’s management team is top notch, boasting several individuals—including CEO/major shareholder Andrew Dinning—from Moto Goldmines Ltd., whose 22 million ounce Kibali project was acquired by AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) and the notoriously discerning Randgold Resources Ltd. (GOLD:NASDAQ; RRS:LSE).
Sarama is now focused on a handful of contiguous projects in the Birimian Greenstone Belt in West Africa. The Birimian Greenstone Belt is rapidly becoming one of the most desirable places to explore and mine in the world, and several projects are being developed or have been recently developed in this area. Most notably:
Roxgold Inc.’s (ROG:TSX.V) Yaramoko project
Endeavour Mining Corp.’s (EDV:TSX; EVR:ASX) Hounde project
Orezone Gold Corp.’s (ORE:TSX) Bombore project
SEMAFO Inc.’s (SMF:TSX; SMF:OMX) Mana project
Sarama is involved with three projects in the area, each of which contains an NI 43-101 resource estimate giving the company nearly 2 million attributable gold ounces.
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