Looking For Cash Flow? Check Out This New Nevada Gold Producer

One common criteria that value investors are looking for is cash flow and which companies have the ability to be self-sustainable.  Keep a close eye on emerging gold and silver producers in mining friendly jurisdictions looking to increase production, resource growth and of free cash flow.

Over the past few months I alerted you that there are emerging producers in mining friendly jurisdictions that may be a better bet than some of the large majors who have made some very risky moves in high cost projects in questionable places.  I originally highlighted Comstock Mining (LODE) in September of 2012 in a piece entitled "Why Cash Flow Is Crucial To Gold and Silver Mining Investors", before the company began production.

In that article I wrote,"I believe the recent acquisition of shares by Gabelli and U.S. Global Investors may just be the beginning of major institutions becoming aware of this emerging Nevada producer."  Now three quarters later the institutions have increased their holdings from 5 million to 14 million shares in search of value and cash flow.  In addition to Gabelli and U.S. Global, Century Management a value investing fund from Texas with over 2 billion under assets bought around 4 million shares in the last quarter.

This continues to indicate to me that the smart money, value investors are buying quality junior miners in stable jurisdictions, rather than some of the big miners taking write-offs for assets near the North Pole or in the middle of war-torn Africa.

Look at the chart above which shows the relative outperformance and major uptrend of Comstock Mining (LODE) versus the Large Gold Miner ETF (GDX).  This substantiates my hypothesis above that emerging producers in stable jurisdictions with cash flow and sustainability will outperform.

Comstock Mining (LODE) in Nevada, recently announced 1st quarter financial results and a production update that showed over six weeks of producing 425 gold ounces per week.  This is ahead of schedule and a positive announcement.  In the first quarter the company shipped 2,261 ounces of gold and 15,599 ounces of silver.  The Bureau of Land Management (BLM) allowed use of an existing haul road which helped the company accelerate growth plans.  This is one of the few junior gold companies increasing production and resource growth.

Additionally in the first quarter, the company published its fourth NI43-101 technical report which validated over 3.2 million gold equivalent ounces and the "Chute Zone" high grades, bonanza discovery.

Comstock Mining is one of the few junior gold miners exceeding production targets, paying down debt and showing excellent resource growth in a mining friendly jurisdiction.  The company is on track to produce 20,000 ounces of gold per year.  In the next few years we could expect that number to increase to possibly 150-200 thousand ounces per year.

Listen to my recent interview by clicking here  or by clicking the screen below with Comstock Mining CEO Corrado De Gasperis where we discuss first quarter results and why Comstock Mining is in a unique position to make great strides in 2013.

Disclosure: Author is long Comstock Mining and the company is a sponsor on Goldstocktrades.com

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