Gold Rush 2010:

3 Top Stocks for Gold +$1,000

Gold Rush 2010:

3 Top Stocks
for Gold +$1,000
By Ian Wyatt, Chief Investment Strategist, Jason Cimpl,
Equities Research Analyst
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000

Fellow Investor,

Since gold is a “value store”, it will inversely track the value of the dollar. In other
words, as the US dollar loses value, the price of gold in dollars rises.

There will be exceptions to this rule. Gold prices dropped along with everything
else during the height of the financial crisis in Fall 2008, as we can see from this
chart of the price of spot gold over the past two years.

It should be noted, however, that the price of gold recovered along with the value
of the dollar as investors around the world turned to safe haven investments in
lat 2008 and early 2009.

The more natural relationship between the US dollar and gold resumed when the
stocks began to rally on March 10, 2009. The reason for this is also pretty simple
– stocks began to rally as investors became more confident that government
stimulus actions had averted a complete financial meltdown and also set the
stage for the US economy to actually start to recover from recession. And as
economic data improved, and more money was raised through Treasury auctions,
the dollar resumed its slide and gold got stronger.

The Next Move for the Dollar and Gold

 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
To recap the recent action, you’ll recall that gold started its next move up in late
August as the US dollar began to slide downward against most other major
currencies.

The initial moves, followed by consolidation and then another leg up indicate that
now’s the time to consider entering a gold stock…

Well, my answer is simple – why invest when you believe the next move for the
asset will have you showing a loss?

I take my responsibility to Wyatt Investment Research members seriously. I

am as committed to finding profitable investments for you as I am to keeping you
out of losing ones. So while it seemed evident to me during the summer that it
was NOT the time to buy gold, I believe now is the time…

Here is an up-to-date chart of the US Dollar Index. The bounce off of 76 is clear.
And the next move should be equally clear – the US Dollar Index might rally to
76, but a further drop to 74 or even 72 looks all but assured.

Now is the Time for Gold Stocks

Yes, now is the time to buy gold stocks. But not just any gold stocks. For instance,
I won’t be recommending the Gold Trust ETF (GLD). Because while we could
capture a decent move in the price of gold, I want to buy something that will
move more than the price of gold.

Now, that doesn’t mean I’m going to recommend options or some kind of exotic
leveraged asset. Fact is, gold mining companies are leveraged to the price of gold.
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
Once a miner’s fixed costs are met, the rest is gravy. And when the price of gold is
rising, you get exponentially more gravy.

So with my compliments, please enjoy new research on three great gold miners.

Best Regards,

Ian Wyatt
Chief Investment Strategist
Wyatt Investment Research
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
Jaguar Mining (NYSE:JAG) PORTFOLIO ADDITION
Concord, NH
Rating: Buy
Price Target: $11.75
52-week low/high: $1.85/$12.14
Market Cap: $685 million

Headquartered in New Hampshire, of all places, the company’s mines are

actually located in Brazil. Jaguar owns three operating mines with another under
development within the Iron Quadrangle, a greenstone belt region (geological
zones that often contain various ore deposits including gold) that has produced
significant quantities of gold for centuries.

The location of Jaguar’s assets in the politically stable Brazil is a big plus for the
company, as it’s not likely to suffer from political unrest that could result in
disastrous disruptions to operations. Additionally, the location of its properties
close to Belo Horizonte, a large city of 4 million people considered to be the
mining capital of Brazil, presents logistic efficiencies for the company—none of
its four mines are more than 90 miles away from the city.

Jaguar’s largest mine is Turmalina, an underground operation that commenced

production in early 2007. The mine yielded about 73,000 ounces of gold last
year, and should eclipse at least 75,000 ounces this year. Through expansion and
exploration efforts in the area, Jaguar hopes to more than double that production
to as much as 185,000 ounces per year by 2013. Through the first half of 2009,
cash costs at the mine were $377 an ounce.
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
Paciência, the company’s second underground mine, only began production last
year but is expected to yield about 70,000 ounces this year. Looking ahead,
production is projected to exceed 230,000 ounces per year by 2013. Cash costs
stood at $490 per ounce through June, but costs are expected to significantly
decline in the second half of the year to $400 an ounce as the mine’s feed grade—
the ratio of gold to mined ore—improve. Over the next five years, Jaguar projects
extraction costs at the mine to stabilize between $425 and $470 an ounce.

The company’s third operation is an above-ground mine named Sabará. This

mine is small in comparison to the other two, with production expected to be
about 15,000 ounces this year. Cash costs currently exceed $600 per ounce at
this project as a result of low grade ore. Adding to difficulties, the mine was not
operational in the first quarter due to heavy seasonal rainfall. Jaguar is currently
reviewing operations and may end up divesting this property before the end of
2010. The mine is such a small part of Jaguar’s operations (only 10 percent of
total production this year) that its divestiture won’t have a significant impact on
the company one way or another. And Jaguar’s Caeté project now under
construction will pick up the slack, and then some.

Construction is on schedule at the Caeté project with production targeted for late
2010. The mine is expected to produce about 100,000 ounces in its first full year
of operation in 2011 and increase to 230,000 ounces in 2014. Current company
projections call for cash costs to be below $300 per ounce, which would make it
one of the lowest-cost mines in the industry.

In addition to the above projects, Jaguar is engaged in several exploration efforts.

It entered into a joint venture agreement with Xstrata, the Anglo-Swiss mining
giant to explore a site in northeastern Brazil. Preliminary study suggests
significant gold mineralization in the area. Jaguar is also drilling holes at selected
zones on land that it owns near its existing mines in search of additional deposits.
The Iron Quadrangle remains relatively under-explored compared to other
greenstone belts around the world, and major new discoveries are not out of the
question.

After acquiring its properties from senior miners, Jaguar is just now beginning to
hit its stride as all its mines swing into full production. Production in the second
quarter jumped by 24% sequentially, and output for the year is expected to be
between 165,000 to 175,000 ounces, an approximate 48% improvement over last
year. At the end of 2008, the company has nearly 2 million ounces of proven and
probable gold reserves and more than 3.5 million ounces of measured and
indicated gold resources. Excluding the Sabará project, management is looking to
increase its reserves by close to 100% and ramp up production to 600,000 to
700,000 ounces annually by the end of 2014—a fantastic compound annual grow
rate of about 33% since 2008.
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
While we would like to see a reduction of Jaguar’s cost levels from the current
$466 per ounce that it averaged through the first half of 2009, there’s no denying
that the company has barely scratched the surface of its potential. There’s room
for further expansion of its existing projects, and its exploration efforts look
promising. Furthermore, the company has an excellent cash position. At the end
of the second quarter, it had $79 million on hand and no debt due until 2012.
This gives the company leeway to invest aggressively in organic growth and
possibly acquire additional assets.

The stock sold off recently after the company was oversubscribed on a convertible
note offering that netted $159.1 million which the company is using to reduce its
interest expense and for an as yet unnamed acquisition. Investors in the common
stock were concerned that if the notes were fully converted it would result in a 16
percent dilution in the company’s shares. The move is a smart one, however, as it
will substantially lower the rate on its debt (from 10.5 percent to 4.5 percent),
thereby improving its cash flow.

We estimate Jaguar will earn $0.51 per share on $126 million in revenues for
2009. With production increasing and gold prices rising it is reasonable to
project 2010 total revenues of $170 million on EPS of $0.76. These estimates are
heavily reliant on gold prices and are subject to change should spot gold prices
decline. That said, given the above growth, shares of Jaguar are fairly valued at
$11.75, which results in a PE of 23 and price to sales of 5.5 using our 2009
financial estimates.
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
Compania de Minas Buenaventura (NYSE:BVN)
Lima, Peru
Price Target: $37
52-week low/high: $9/$35.08
Market Cap: $8.5 billion

Lima, Peru-based Compania de Minas Buenaventura (BVN) is a diversified

mining company that so far has flown under the radar for most investors, but it’s
likely to become a familiar name in the years ahead. Peru, which has a stable,
pro-U.S. government, is the world’s third-largest producer of copper, zinc and
tin, the biggest miner of silver and the fifth-largest of gold. And Buenaventura
has the good fortune to be involved in each of these important markets.

First and foremost Buenaventura is a precious metals play, ranking as one of the
world’s top producers. This year, roughly 57 percent of the company’s estimated
$740 million in revenue will come from gold; another 13 percent from silver. It
derives the balance of its sales primarily from copper and zinc.

The company’s gold reserves currently stand at 11.9 million ounces, along with
more than 85 million ounces of silver. Of those reserves, production of 1.28
million ounces of gold and 18 million ounces of silver are on tap for this year,
none of which is hedged, giving the company leverage to rising prices.

Not only is Buenaventura a low-cost producer, mining gold at an average cash

cost of less than $350 an ounce and copper at 85 cents a pound, it also has plenty
of room to expand operations. In addition to working with Newmont, the
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
company is participating in several mining exploration projects with Minera ABX
Exploraciones, Barrick Gold, Gold Fields and Southern Copper.

The company should earn around $1.96 a share for 2009, using conservative
assumptions for gold of $900 an ounce and copper of $1.75 a pound. Looking out
over the next five years, those profits should climb at an annual rate in excess of
20 percent. Financially, the company is quite strong, with a debt load that’s a very
manageable $327 million and easily serviced by cash flow.
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
Randgold Resources (Nasdaq:GOLD)
South Africa
Price Target: $82.50
52-week low/high: $22.28/$76.08
Market Cap: $5.6 billion

Gold miners are increasingly scouring remote regions of the globe for lode
bearing rock or ore bodies suitable for profitable heap leaching. One company
that has achieved a good deal of success in this endeavor and which has a bright
future is Randgold Resources (GOLD).

This gold mining and exploration company was incorporated in 1995 and is
headquartered in the Channel Islands, of all places. It has two operating mines in
Mali (Morila and Loulo), another mine in Cote D’Ivoire (Tongon) that’s
scheduled to begin production in 2010, and a portfolio of exploration projects in
West and East Africa.

Randgold’s assets include about 11.5 million ounces of gold reserves (proven and
probable) and about 18 million ounces in gold resources (potential reserves that
haven’t been fully drilled or explored), of which 8 million ounces of gold reserves
and 14 million ounces of gold resources are attributable to Randgold due to
partial ownership.

As a pure gold player, Randgold is leveraged to what we see as a strong gold

market for the upcoming years. World gold production has been in decline for the
last seven years and by some estimates is forecasted to decline by an average of 3
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
percent per year over the next five years. But Randgold is operating on largely
untrampled ground in West Africa; its average annual production growth for the
next three years is projected to be north of 20 percent as it continues to expand
operations. Randgold expects its share of the gold production to exceed 750,000
by 2011, up from about 425,000 ounces in 2008. This strong production growth
at a time when the industry’s yield is declining should make the stock stand above
the crowd in the coming years.

The company has a healthy balance sheet with a strong cash position and very
little debt. At the end of June 2009, Randgold had about $220 million in cash
and cash equivalents and less than $1 million in debt, giving it plenty of capital to
deliver growth of production and the development of its various projects. So far
the company has grown organically, but acquiring smaller miners in distress is a
future possibility, too, given its strong cash position.

For 2008 Randgold had earnings of $0.54 per share, in line with most estimates.
Its cash costs was about $460 per ounce, but with low energy costs for 2009, its
cash cost is expected to decrease to about $447 per ounce this year. This year the
Randgold is expected to earn $1.04 on $421 million in revenue. Next year
analysts are looking for EPS of $1.89 on a 32% increase in revenues to $550
million. With a market cap of about $5.6 billion, Randgold is still a mid-tiered
gold miner, but we think it’s on its way to becoming a major player.
 Gold Rush 2010:
3 Top Stocks for Gold +$1,000
Disclaimer

Business Financial Publishing, LLC, publisher of Wyatt Investment Research and this report, is neither a
registered investment adviser nor a broker/dealer. Readers are advised that this electronic publication is
issued solely for information purposes and should not to be construed as an offer to sell or the solicitation
of an offer to buy any security.

The views expressed herein are based upon our analysis of the issuer's public disclosures, and assumes
both their accuracy and completeness.

The opinions and statements included herein are based on sources (including the companies discussed
and public sources) believed to be reliable and in good faith, but no representation or warranty, express or
implied, is made as to their accuracy, completeness or correctness. We have not independently verified
the information contained herein. This information is not intended to be used as the sole basis of any
investment decisions, nor should it be construed as advice designed to meet the investment needs of any
particular investor. We encourage you to consult with independent financial advisors with respect to any
investment in the securities mentioned herein. You should review a complete information package on all
companies, which should include, but not be limited to, the Company's annual report, quarterly reports,
press releases and all regulatory filings. All information contained in the Wyatt Investment Research
should be independently verified with the subject company. The foregoing discussion contains forward-
looking statements, which are based on current expectations, estimates and projections, and differences
from such expectations, estimates and projections can be expected.

Wyatt Investment Research is intended only for residents of the United States. Wyatt Investment
Research is not intended for residents of the United Kingdom, and is not an approved publication by the
Financial Services Authority in the UK.

The information contained in this newsletter is not intended to be a complete discussion of information
regarding all of the current and/or intended business activities of the covered companies. Any opinions
expressed in Wyatt Investment Research are statements of judgment as of the date of publication, are
subject to change without further notice, and may not necessarily be reprinted in future publications or
elsewhere.

Business Financial Publishing, LLC and its members, managers, writers and employees do not accept
compensation from the companies discussed within Wyatt Investment Research.

Business Financial Publishing, LLC and its members, managers, writers and employees, and their families
from time to time positions in the securities of the companies discussed within the Wyatt Investment
Research. These positions are subject to change at any time without notice. The following is a disclosure
of the securities owned by Business Financial Publishing, LLC and/or its members, managers, writers,
employees and immediate family members in the following companies discussed within this Special Report
issue of the Wyatt Investment Research as of the date of publishing this report.

NONE

YOU SHOULD VERIFY ALL CLAIMS AND DO YOUR OWN RESEARCH BEFORE INVESTING IN ANY
SECURITIES MENTIONED ON THIS WEBSITE. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES
A HIGH DEGREE OF RISK. YOU MAY LOSE PART OR ALL OF YOUR PRINCIPAL INVESTMENT.

We encourage you to review the financial and educational information available at the U.S. Securities and
Exchange Commission ("SEC") website (http://www.sec.gov) and the National Association of Securities
Dealers ("NASD") website (http://www.nasdr.com).

© 2009 Business Financial Publishing, LLC. All rights reserved.

This document and all of the information contained herein can not be reproduced, modified, or distributed
in any other way without the prior written authorization from Wyatt Investment Research.

Wyatt Investment Research

c/o Business Financial Publishing, LLC
1725 DeSales Street, NW
Washington D.C. 20036
Phone: 202-420-7800
Web: http://www.wyattresearch.com