You might think that West Africa and South America are risky places to operate a gold mine, but that’s not where the speculation comes in. GSS is planning to build a new sulfide-processing plant at its Bogoso site. The plant offers a new technology that would finally allow the company to process some of the 82% of its sulfide ore profitability that it can’t right now.
Cramer says the doubt among many analysts that this will happen any time soon has caused a pullback in the stock – a perfect buy-in opportunity. If you plan to buy for your real portfolio and not the CNBC contest, be sure to use limit orders. Remember, this is a pure speculative play.
Here’s Cramer prediction for how the upside story could play out: Management could announce the completion of that Bogoso plant sooner than expected. That would chill out the analysts and maybe lead to some upward estimate revisions. A completed plant is expected to double GSS’s gold production compared with last year while at the same time reducing cash costs. This all could bode well for the numbers.
Again, if you’re buying for real, Cramer thinks there’s takeover potential here, especially if that plant gets up and running. Also, gold prices are helping to move the stock. Adams raised its price target on the stock from $2 to $6.50 back on April 19 because of the move in gold, and there’s still plenty of room to run before GSS hits that target. There’s your speculation.
Bottom Line: GSS – Buy it for the game, buy it for the glory, or do what Cramer would do and buy it because he thinks it’s going much higher.
Questions? Comments? firstname.lastname@example.org