Skip to main content
analysis

On today’s TSX Breakouts report, there are 27 stocks on the positive breakouts list (stocks with positive price momentum), and two securities are on the negative breakouts list (stocks with negative price momentum).

Discussed today is a stock that appears on the positive breakouts list. Year-to-date, the share price is up 56 per cent and analysts are anticipating the share price may rise a further 43 per cent over the next year. The stock has a unanimous buy recommendation from six analysts. The security highlighted today is Liberty Gold Corp. (LGD-T).

A brief outline is provided below that may serve as a springboard for further fundamental research when conducting your own due diligence.

The company

Vancouver-based Liberty Gold is focused on gold exploration and development in the prolific Great Basin area of the United States. Its two flagship projects are located in Idaho and Utah, regions that do not have geopolitical risks and are mining friendly jurisdictions.

The previously operated 100-per-cent owned Black Pine project located in Idaho continues to deliver positive results. On June 16, the company reported strong metallurgical test results from its Black Pine project reflecting high gold extractions and low future capital and operating costs, “Gold extractions from six, 300 kilogram, large-diameter column tests were rapid, and more than 80 per cent of the leachable gold was extracted within 10 days, with final column leach gold extractions ranging up to 92.8 per cent.”

Meanwhile, past-producing 100 per cent owned Goldstrike mine is located in southern Utah and has attractive economics. The PEA (preliminary economic assessment) indicated the following economics: 22,500 tonns per day, average gold recovery of 78 per cent, cash cost plus all-in sustaining cost of U.S. $793 per ounce, initial total capital costs of U.S. $113-million with a mine life of 7.5 years.

The company has a strong balance sheet with no debt. Consequently, management believes it can adequately fund its exploration activity planned for 2020.

The stock has potential catalysts that may drive the share price higher in the upcoming months including drilling results with three rigs on the Black Pine project, metallurgical results at Black Pine, a resource estimate for Black Pine, potential asset sales (the TV Tower asset located in Turkey and the Baxter Springs project located in Nevada), and a firming gold price.

Furthermore, Liberty Gold is a potential future acquisition target.

Chairman Mark O’Dea is described on the company’s website as a “deal maker” who “has built and financed international mining companies from Canada to Africa, taking them from exploration and discovery to development and operations. His companies are built on a common foundation: high-quality, long-life projects with lasting economic opportunities, community benefits and environmental protection.

Most recently, Dr. O’Dea co-founded and served as executive chairman of True Gold Mining. After building the Karma Heap Leach Gold Mine in Burkina Faso, West Africa, True Gold was sold to Endeavour Mining in 2016. As co-founder and CEO of Fronteer Gold, Dr. O’Dea grew the company from startup to its 2011 sale to Newmont Mining Corp., a deal that included the spin-out of Liberty Gold. He also co-founded and served as Chairman of True North Nickel and CEO of Aurora Energy, sold to RNC Minerals and Paladin Energy in 2014 and 2011, respectively.”

Interestingly, Newmont Mining Corp. has a 5.6-per-cent ownership position in Liberty Gold.

Dividend policy

The company currently does not pay its shareholders a dividend, and management does not anticipate paying a dividend to shareholders in the near future.

Analysts’ recommendations

There are six analysts that cover this small-cap stock with a market capitalization of $412-million, and all six analysts have buy recommendations.

The firms providing research coverage on the company are: Cormark Securities, Haywood Securities, National Bank Financial, PI Financial, Sprott Capital Partners, and Stifel Canada.

Revised recommendations

Earlier this month, four analysts increased their target prices:

  • Stifel Canada’s Tyron Breytenbach to $3.40 from $3.30.
  • Haywood Securities’ Geordie Mark to $2.20 from $1.60.
  • Sprott Capital Partners’ Brock Salier by 25 cents to $1.85.
  • National Bank Financial’s John Sclodnick, the analyst at National Bank Financial to $1.70 from $1.40.

Financial forecasts

The consensus revenue estimates are US$129-million in 2021, increasing 32 per cent to US$170-million in 2022.

Valuation

Analysts typically value the stock on a price-to-net asset value basis.

The average one-year target price is $2.42, implying the stock price has 43 per cent upside potential.

Individual target prices are as a follows in numerical order: $1.70 (from National Bank’s John Sclodnick), $1.85, $2, $2.20, and two at $3.40.

Insider transaction activity

Year-to-date, only one insider has reported trading activity in the public market.

On Jan.29, Jim Lincoln, chief operating officer – U.S. operations, bought 70,000 shares at a price per share of $1.276, increasing this account’s holdings to 1,371,000 shares. The cost of this investment exceeded $89,000.

Chart watch

Year-to-date, the share price is up over 56 per cent.

On Friday, the stock price rallied 9 per cent on high volume with over 2.2-million shares traded. This is well above the three-month historical daily average trading volume of approximately 807,000 shares.

In terms of key resistance and support levels, the stock price has major overhead resistance around $2. On a pullback, there is initial support around $1.40. Failing that, there is strong technical support around $1.30, near its 50-day moving average (at $1.29).

Positive BreakoutsJune 19 close
RZZ-TAbitibi Royalties Inc. $22.30
BOS-TAirBoss of America Corp. $17.03
BLX-TBoralex Inc $30.42
CS-TCapstone Mining Corp $0.82
CJT-TCargojet Inc $161.86
CG-TCenterra Gold Inc $14.63
CSW-A-TCorby Spirit and Wine Ltd $16.93
DSG-TDescartes Systems Group Inc $72.00
DCBO-TDocebo Inc. $36.17
GBR-TGreat Bear Resources Ltd. $15.56
IBG-TIBI Group Inc. $4.84
ISV-TInformation Services Corp. $15.21
KXS-TKinaxis Inc $196.56
LGD-TLiberty Gold Corp. $1.69
MFI-TMaple Leaf Foods Inc $30.62
NWC-TNorth West Co Inc. $30.77
NDM-TNorthern Dynasty Minerals Ltd. $2.04
PLZ-UN-TPlaza Retail REIT $3.58
PBH-TPremium Brands Holdings Corp $90.46
RSI-TRogers Sugar Inc $4.90
SHOP-TShopify Inc $1,204.74
SMT-TSierra Metals Inc $1.42
TOY-TSpin Master Corp. $24.08
SPB-TSuperior Plus Corp $11.22
TCL-A-TTranscontinental Inc $14.67
TRIL-TTrillium Therapeutics Inc $12.19
VMD-TViemed Healthcare Inc. $16.00
Negative Breakouts
CGX-TCineplex Inc $10.65
XAU-TGoldMoney Inc. $2.18

Source: Bloomberg

The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company’s dividend policy, analysts’ recommendations, financial forecasts, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error

Editorial code of conduct

Tickers mentioned in this story