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Alaska Gold Mining Stocks

 November 13, 2009 03:03 PM
 


Heart-pounding word of massive gold strikes in Alaska swept North America in the late 19th century. . . and the rush was on.

Many of the fortune-hunters who set out on the journey were professionals. They were teachers, lawyers, doctors — even a mayor or two — who gave up respectable careers to search for buried treasure.

Most were well aware that it was unlikely they'd hit the mother lode. But they went anyway — if for nothing else, for the adventure.

 

[Related -What Gold Miners Are Thinking Today]

Adventurers seeking vast fortunes from Alaska's gold resources are still around today.

But instead of eyeing for small flecks of yellow metal in a river, we're investing in Alaska's gold mining companies.


Alaska is one of the best states in the U.S. to mine for gold. It hosts an estimated gold resource of over 250 million ounces, and is one of the most mining-friendly states in the nation.

In fact, former gold mine developers run the state's Department of Natural Resources, the organization that regulates mining.

DNR Commissioner Tom Irwin is a gold mining veteran with more than 30 years of experience in the industry, overseeing operations such as Kinross Gold's (NYSE: KGC) Fort Knox mine — Alaska's largest gold producer.

[Related -Kinross Gold Corporation (USA) (KGC), Synovus Financial Corp. (SNV), Two Stocks With Heavy Insider Buying]

So it comes as no surprise. . . The state of Alaska has never turned down a gold mining permit.

Mining legislation is even written right into the state constitution:

Article 8 - Natural Resources

§ 1. Statement of Policy

It is the policy of the State to encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.

§ 2. General Authority

The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.

With rising gold prices, and support from the state to develop its abundant resources, capital investment in Alaska's precious metal industry has skyrocketed over the past few years. This investment has developed Alaska into the second-largest gold producer in the U.S. — contributing about 10% to total annual U.S. production.

With investment money still pouring in, estimates suggest gold production in Alaska will continue to climb this year, nearing the peak of production during the Klondike gold rush. That means there's never been a better time to start investing in. . .

Alaska's Gold Mining Stocks

Investors have already stuck the proverbial "mother lode" with companies that have quality Alaskan gold projects such as NovaGold Resources (NYSE: NG), Northern Dynasty Minerals (AMEX: NAK), and International Tower Hill Mines (TSX-V: ITH).

NovaGold Resources (NYSE: NG)

NovaGold Resources is a $990 million exploration and development firm that has a 50/50 joint venture with Barrick Gold (NYSE: ABX) in the Donlin Creek mine. Located in central Alaska, the Donlin Creek mine is special because it is expected to be one of only a handful of gold mines in the world capable of producing over 1 million ounces of gold a year. NovaGold investors have had the opportunity to make a gain as high as 289% this year.

Northern Dynasty Minerals (AMEX: NAK)

Northern Dynasty Minerals is a smaller $680 million exploration and development company that has a 50/50 joint venture with Anglo American (LON: AUUK). The two companies share the rights to the massive Pebble copper/gold deposit in southern Alaska. The Pebble deposit is estimated to contain 72 billion pounds of copper, 94 million ounces of gold, and 4.8 billion pounds molybdenum, as well as quantities of silver, palladium, and rhenium. Since the beginning of the year, shares of NAK have increased as much as 133%.

International Tower Hill Mines (TSX-V: ITH)

International Tower Hill Mines is the smallest of the three, with a market cap of $370 million. The company has a total of eleven exploration-stage projects in Alaska, including one with an 11 million ounce gold resource. International Tower Hill has significantly increased the company's resource base over the past several months, so shares have outperformed both NG and NAK. For the year, ITH investors have gained over 300%. In fact, as I write this, shares of ITH sit on a 52-week high.

Gold prices have had surprising strength over $1,100 an ounce of the past few days. And it looks like these three growing Alaska gold stocks could continue to knife higher along with gold prices.

If you're feeling a little more adventurous and want a little leverage, Kiska Metals (TSX-V: KSK) will be an Alaskan gold stock to watch over the next several weeks.

Kiska Metals was formed over the summer by the combination of two international mineral exploration companies: Rimfire Minerals Corp. and Geoinformatics Exploration Inc. The group is now focused on the development of the Whistler project in southern Alaska, which covers an area of 440km² within the same geological belt that hosts Northern Dynasty's and Anglo American's massive Pebble deposit.

The Whistler project is currently home to almost 6 million ounces of gold resources, but the company is rapidly working to increase those resources with a new drill program that began in September.

Conclusion

With considerable resources and a mine-welcoming government, Alaska is a good place to mine for gold. Investors can take advantage of both rising gold prices and the state's goodwill toward mining by buying shares of companies that have exposure to Alaskan gold projects.

There are many other Alaska gold mining companies on the market other than the four I mention above. I found several mid- and large-cap firms and a handful of very small 20 cent stocks with exposure to Alaskan gold while doing research for this article. So there are plenty out there.

As always, it's important for you to do your own due diligence to look for companies with talent, experience, and quality projects.

Three weeks ago, I started to build a brand-new portfolio to seek high-yield gains from junior gold and mining stocks. I've made three recommendations, and all three have since returned a profit for an average 35% gain. You can find more information on how to get access to these three junior gold stocks in my latest research report. 

Good Investing,

Luke Burgess

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