Like many junior miners, AIM listed Highland Gold Mining (HGM) has seen its share price decimated during 2012. The stock traded at 197p at the start of the year but now sits at 91p valuing the Russian based gold producer at just shy of £300 million. Indeed during the past few weeks as folks have worried that the great bull run in the gold price is about to end the shares have lost 20%. I do not think gold is heading lower. So is Highland a recovery buy or is the sell-off only just beginning? I sense we may be close to the bottom.
The material de-rating is down to a number of factors. The whole sector has been about as popular as the Jimmy Savile fan club during 2012 and it is hard to swim against such a tide. However having Barrick Gold dump its 20% stake in the company in April at 120p a share also spooked some investors. And there were operational issues thanks to inclement Russian weather (whatever happened to global warming?) and that impacted net income. But recent news is more positive.
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