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Are Amur Minerals Corporation, Xcite Energy Limited And Frontera Resources Corp Good Value Despite Recent Gains?

Smaller-cap stocks have been making a comeback in recent months, and a few nice gains have already been made. But which of the recent winners are still looking like good value?

Eight-bagger

Amur Minerals (LSE: AMC) shares have soared by nearly 750% in the past 12 months to 28.8p, with the bulk of that coming since 21 May. The news on 22 May, which led to an 85% leap on the day, was that a licence had been granted for production at the firm’s Kun-Manie nickel copper sulphide deposit in Russia’s Far East — and that topped a months-long period of good news on Amur’s minerals prospects.

There are no forecasts available for Amur, but it’s a good example of what can happen with speculative investments in exploration and prospecting companies. Amur still has a long way to go to get into actual production, and it’s sure to need more cash for its operations before it starts earning profits — and it’s exposed to Russian political control. But for those who know the risks, it could still be a good buy.

Recent uptick

The gain at Xcite Energy (LSE: XEL) has been far more modest and more recent. In fact, the shares are down 47% over 12 months — but we’ve seen a 35% recovery since the end of April to 36p, even though full-year results released at the end of March did little to generate any enthusiasm.

The firm’s year-end reserves report looked tempting and that gave the shares a nice boost. And since then we’ve had a first-quarter update that has lifted estimates, with reserves at its Bentley Field now estimated at a value of “…approximately US$1.9 billion, US$2.3 billion and US$2.6 billion on a 1P, 2P and 3P basis”.

We’re back to the old problem of having healthy reserves but not the cash to get them pumping, so the value of Xcite is going to depend very much on its future funding. I’m cautious, but Xcite could do well.

Biggest risk?

A company that’s even harder to call is Frontera Resources (LSE: FRR), a tiddler with a market cap of only £27m (as of 9 June), and a share price spread of 9% on a mid-price of 0.82p as I write — but it is up 15% in the past week. Frontera recently marked its first year of production in Georgia, though it’s yet another of the many small explorers and producers that have yet to turn a profit.

How will Frontera fund its future? It recently issued 350 million new shares at a price of 0.8p each which it placed with institutional investors, raising £2.8m. The firm told us the cash should help achieve production by the end of 2015 of approximately 7 million cubic feet per day of gas and approximately 1,000 bbls per day of oil. Is that enough to make the shares good value today? That’s for you to decide.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.