Three Junior Stocks To Consider For 2010

by Peter Grandich
While I think 2010 can be a far tougher year for equities in general than 2009 was, I still believe on a very selective basis speculators can pick away. Just remember two things when you’re looking at junior resource stocks:

The word speculation was created by Wall Street so they didn’t have to use the real word that describes what you will be doing - gambling.

Failure is the norm. For every company that goes the whole nine yards, nine won’t despite their best intentions

Evolving Gold (EVG-TSX-V) - First and foremost, the company has made a discovery that just about all their peers would die for. It’s critical to grasp this as they’ve already separated themselves from the pack on this fact alone.

The company made a major discovery at its Rattlesnake project in Wyoming. Because some of the early holes were high grade intercepts, the market took off. Hindsight being 20-20, some players didn’t grasp the geological setting and just assumed they hit some sort of “mother-lode” high grade behemoth. The stock was aggressively bid up despite the obvious fact it was, at best, only the first inning. While follow-up results were again what their peers live for, the perception was that they were somehow disappointing.

This misconception fed on itself and created undeserving disappointment. This adversity had indeed created opportunity. As of this writing, we’re awaiting over 40 drill holes’ assays. Despite the limited results so far, the deposit is already being compared to the Cripple Creek Deposit where some 25 million ounces of gold have been found.

While it’s far too early to even begin any formal analysis of how many ounces are there, I’ve already done a back of the envelope analogy and come up with possibly 2 million ounces at this point. Given the going rate for ounces in the ground, the stock’s current market cap is not far from the valuation my envelope came up with.

With this in mind, it appears the stock has 20%-40% downside risk and 100% to ??? upside potential in my humble (but biased) position. This risk/reward appears quite intriguing to speculators/gamblers out there.

Silver Quest Resources (SQI-TSX-V ) - Silver Quest and its predecessors have a long history in the mining industry as one of the first junior mining companies to list on the Venture Exchange. Silver Quest is an exploration company filling a niche in British Columbia, Yukon, and Ontario by advancing and developing silver and gold resources. I like this company for three main reasons. The company’s president, Randy Turner, is committed to the success of the company, as proven by his more than 15 years of involvement in various roles. Second and third, I like the two main assets, the Capoose -Silver Trend property and the Davidson Property, both silver and gold properties with vast upside potential located in central BC.

Mr. Randy Turner, the new President and CEO of Silver Quest, is a skilled and qualified professional geologist with over 38 years of mineral exploration, business and financing experience from which to draw. Mr. Turner has spent the majority of his career working for Canadian mineral companies. As president of Winspear Diamonds Inc., Mr. Turner guided the company from the discovery of the Snap Lake diamond deposit in northern Canada through its sale to De Beers Mining for C$305 million.

Prior to his position at Winspear, Mr. Turner was president of Trimin Resources Ltd. where he was involved in the development and sale of the McIlvenna Bay copper/zinc deposit in Saskatchewan. Mr. Turner also spent many years working on property acquisitions and joint ventures for Esso Minerals in Canada and AGIP Mining in the US and Australia. Mr. Turner’s knowledge, contacts and experience in the exploration industry are an invaluable asset to Silver Quest, and one of the reasons, I believe, that this company is truly one to watch as they have great potential knocking at their door.