As readers know, one of our favorite smaller Gold producers is Richmont Mines (RIC, TSX) which has also been one of the top-performing stocks on the TSX this year. This is a very well-run company with an impressive growth profile that’s on track in our view to earn at least 80 cents per share in 2011 (3rd quarter results this coming week perhaps), giving it a current PE multiple of only about 15 given Friday’s closing price of $12.61.
Commercial production at Francoeur is expected to commence during the first quarter of next year, boosting RIC’s monthly production by approximately 40%, while an updated NI-43-101 resource estimate for the growing and impressive Wasamac deposit west of Rouyn-Noranda is expected by year-end. The company has other “irons in the fire” as well.
Given the above factors and the bullish outlook for Gold, Richmont’s current market cap of $400 million has to be considered low – Wasamac alone could be worth that much. From a fundamental standpoint, therefore, the odds of a “double top” on the chart appear remote. Richmont has been a huge success story this year and we expect that trend to continue.
Note: John and Terry do not hold positions in RIC (Jon does).
