This little secret’s almost out, Claude Resources ready to spread wings and fly.

Since highlighting Claude Resources (TSE: CRJ) (OTCMKTS: CLGRF) on October 11, 2015 here and then again here (can you tell that i have a thing for Claude?), the stock is up a modest 50%. But after crushing buy and hold investors for the past years 4 years, it feels as though new money is just beginning to flow back in.

And why shouldn’t new money be jumping all over this thing– Claude’s fundamental and relative (technical) strength has improved dramatically over the past year. I can’t tell you for certain, but i would bet Claude was one of the best performing miners of 2014. Along with Richmont Mines, another gold miner that Penny Stock Experts [dot] com has been covering like white on rice. See… look”e” here… our friend RIC is up roughly 46% since we posted this back on November 8th.

Upside breakout imminent?
You can only stretch a rubber band so far before it breaks or takes flight. Claude’s stock chart reminds me of a rubber band, i don’t think its going to break down, leaving only one option, it’s going to take flight. For 20 months now Claude has been building a base between 13 cents and 34 cents, this is a massive accumulation pattern! When it breaks above 34 cents, which it has tried to do a number of times on increasingly higher volume lately, it can sail towards 47 and then 58 cents without much of a problem.  There isn’t much resistance at those levels.

By the numbers…
As we now know, 2014 was a turnaround year for Claude. If you haven’t read the press release, it was a record in terms of gold production. Metal content was higher by 43% (7.32 g/t), cash and equivalents increased to $11.2M, and total debt was reduced by $10.6M– damn good.

But that’s all in the rear view mirror now. Looking forward to 2015… Claude has given gold production guidance of 60,000 to 65,000 ounces. Santoy Gap should ramp up to 500 tonnes per day, supplying a majority of the ore to Claude’s Seabee mill. Operating costs in 2015 are expected to be slightly lower than 2014 with unit cash costs ranging from CDN $750 to $810 per ounce and all in sustaining costs to range from CDN $1,175 to $1,275 per ounce.

“Our outlook for 2015 demonstrates our focus on cost containment, improving margins and sustaining a production profile of over 60,000 ounces per year,” added CEO Brian Skanderbeg. “We begin 2015 in a strong financial position and with a business plan that will generate profit at and below current gold prices.”

With any help from gold Claude could be a $1 stock once again,
Let’s try to be conservative here, by assuming the lower-end of Claude’s projections hold [60,000 ounces production @ AISC $1,275 Cdn], it would be making a $200 per ounce margin at today’s Canadian gold price of $1,477 — or roughly $12 million. If investor psychology shifts from thinking gold is trending down to gold is trending up, it wouldn’t be outlandish for the market to assign a 10-multiple to operating cash flow (gold miners got premiums to that just a handful of years ago). That would move Claude closer to a market cap of $120M or 60 cents per share.

Now then, if gold, being the hated and vilified barbarous relic that it is, was to appreciate (i know it sounds crazy, but just play along here…) by 10% from current levels that would be $1,624 Cdn. per ounce. If Claude was to hit the high end of its production guidance [65k ounces] and the low end of the cost range [$1,175], conceivably, it could generate $29.2M on an annual basis. That scenario would propel Claude up to $1 and likely well beyond it, northward.

I hear Saskatoon is quite cold in February…
But that’s not stopping a handful of analysts from taking the trip to see Claude’s Seabee operation wit their own eyes. That’s pretty big news for Claude and a potential catalyst for the stock going forward. Back in the good ol’ days, when Claude was over $2 per share, it had “8” analysts officially covering the stock– today it has zero. Now that Claude has resumed profitability and people have gotten around to reading up on the Santoy Gap, funds and analysts are willing to meet with Claude again, maybe even return a phone call once in a while.

Bottom Line: unless the visiting analysts see something on the ground that they really don’t like, you don’t have to go too far out on a limb to assume at least one of them will write-up a report on Claude and assign it a price target (probably a number higher than 33 cents). That will be a reason for their clients to buy the stock, even strangers will read the press release and be motivated to move because of such a prestigious endorsement.

Additionally, Claude should be releasing its financials for Q4 and a resource update on March 30th– so mark your calendar.

*Author has long position in Claude Resources