Endeavour Financial announced its quarterly results on February 11, with management repeating to the market that they intend to merge several junior gold producers together, as they see this as the most undervalued part of the gold market.
Their own stock – EDV-TSX – is a perfect example.
Endeavour announced in its Q2 report that the company’s NAV (Net Asset Value) was $3.41, while the stock was trading at $1.75 – basically a 50% discount. Now more than 70% of their portfolio is two junior gold producers in West Africa – Etruscan Resources and Crew Gold.
The prize in their Gold Strategy is a re-valuation, much like Endeavour got with New Gold (NGD-TSX) two years ago when 3 junior producers – Peak Gold, New Gold and Metallica Resources – were all trading at 0.7 NAV. After the merger the company was able to get to achieve a 1.5x NAV valuation.
While Endeavour’s financial statements showed their book value has increased by $98 million in the last 9 months, their stock has not kept up. Investors can actually buy Endeavour for cheaper than the valuation of just their two major gold positions.
