Gold Mining Stocks: Time to Consider a Few Mexico Gold Plays? AUG, GG, LSTG

Gold mining stocks have been holding up well - meaning it might be time for investors to expand their investment horizon to take a closer look at gold stocks AuRico Gold (NYSE: AUQ), Goldcorp (NYSE: GG) and Lone Star Gold (OTC: LSTG) that are also important Mexico gold plays. After all, Mexico offers many favorable conditions for both well established gold companies and small cap or exploration stage gold mining companies alike. For starters, Mexico overhauled a nationalistic mining law prior to passing NAFTA and then privatized Mexican government’s mining holdings. Mexico has also made a concerted effort to increase the transparency of its mining laws and mining regulations. Finally, Mexico has consistently ranked high (together with countries like Australia, Canada and Chile) for its political and regulatory stability while the Mexican people generally have a positive view of mining. Hence, should you consider Mexico gold mining plays like AuRico Gold, Goldcorp and Lone Star Gold? Here is a closer look at all three stocks to help you decide:

AuRico Gold (NYSE: AUQ)

AuRico Gold, formerly known as Gammon Gold, is a mining company engaged in the exploration for and development of gold and silver deposits in Mexico. On Thursday, AuRico Gold rose 1.15% to $10.54 (AUQ has a 52 week trading range of $6.15 to $14.17 a share) for a market cap of $1.84 billion. Investors should be aware that AuRico Gold has gained 55% over the past 52 weeks, has a beta of 1.06, P/E of 23.26, EPS of $0.45, book value of $6, quarterly revenue growth (yoy) of 97.90% and no indicated forward dividend. Investors should also be aware that AuRico Gold’s recent acquisition of Northgate Minerals gives the company five operating mines and one mine that will be in production by the end of 1Q2012. On the other hand, it remains to be seen how the acquisition will impact AuRico Gold because while the company was profitable but Northgate Minerals was a marginally unprofitable company. Hence, investors should watch AuRico Gold’s financials for the 3Q2011 and the coming quarters.

Goldcorp (NYSE: GG)

Goldcorp is one of the world's fastest growing senior gold producers involved in the exploration, development and acquisition of precious metal properties in Canada, the USA, Mexico and Central and South America. On Thursday, Goldcorp fell 0.73% to $51.40 (GG has a 52 week trading range of $39.04 to $56.31 a share) for a market cap of $42 billion. Investors should note that Goldcorp has risen almost 9% over the past 52 weeks, has a beta of 0.55, P/E of 22.70, EPS of $2.26, book value of $25.76, quarterly revenue growth (yoy) of 47.80%, quarterly earnings growth (yoy) of negative 53.50% and an indicated forward dividend of $0.41 for an indicated forward dividend yield of 0.80%. Investors should also note that for 3Q2011, Goldcorp reported that revenues increased 48% to $1.3 billion over 3Q2010 results while adjusted net earnings increased 88% to $459 million. In addition, gold production at Los Filos in Mexico increased 10% to 73,200 ounces at a total cash cost of $490 per ounce while Marlin in Guatemala had a record production and Porcupine in Ontario exceeded production expectations.

Lone Star Gold (OTC: LSTG)

Lone Star Gold is an exploration stage company involved in the acquisition, exploration, and development of gold and other precious metal properties in Mexico and the USA. Specifically, Lone Star Gold has a 70% Working Interest in concessions that cover 800 hectares in the La Candelaria project in Chihuahua, Mexico plus an option to purchase a 70% interest in the Ocampo Project, a 570-hectare gold-silver project in Chihuahua State, Mexico. On Thursday, Lone Star Gold fell 3.50% to $0.965 (LSTG has a 52 week trading range of $0.60 to $1.40 a share) for a market cap of $111 million. Investors should note that Lone Star Gold’s short-term goal is to become a major mid-tier gold and silver producer in Mexico and then to eventually have multiple operating gold and silver mines within North America. In the mean time, Lone Star Gold has just announced that the first stage of drilling on the company's Mexico-based La Candelaria gold-silver project has just begun. Based on first stage drilling results, Lone Star Gold will begin a second exploration and drilling stage in mid-January, 2011. In other words, Lone Star Gold is still in the early exploration stage but worth keeping an eye on.

The Bottom Line. Goldcorp is worth considering now while AuRico Gold and Lone Star Gold are worth having on a gold investment watch list at the very least.