Most of the natural resources companies written about in these posts are companies still exploring or just getting into production. As with all natural resource companies, however, “if it isn’t one thing, it’s another.” Some “one things”, however, are much better than others. When the “one thing” is expansion put on hold because of the fickle nature of natural resource pricing, an investor may have found a company waiting to be exploited. Timing is everything in this regard, but if the right company is found, there is gold in them thar hills.

Capital Gold Corp., a junior gold production and exploration company, works to extract and prospect gold primarily in Mexico. The company is currently extracting gold from its Sonora mine location and exploring opportunities in the region with other junior operators.

For the period ending October 31, 2008, the company reports extraction of 11,000 ounces of gold from its primary Sonora gold mine at a sale price of $801.00 per/oz. To date, the mine has produced 50,000 ounces of gold. Over the life of the mine, estimates of total available gold at the site have been placed at 850,000 ounces.

From a general point of view, the company is currently finding itself in a solid position to lay groundwork for a plan of expansion. There are, however, several factors weighing on the company that are out of its control for the moment. One might think that with a mine producing and infrastructure in place all would smell of roses. Unfortunately, current economic conditions have not resulted in upward gold price movements that one might generally expect given the current economic climate. In other words, the price of gold should be quite a bit higher than it actually is. Why this is occurring is largely unexplainable, other than to suggest that investors are running for the safety of the US dollar in the form of treasury bills instead of historically safe hard assets such as gold.

As solid as the company’s timing has been with regard to bringing its gold mine into production, general economic conditions and the unexplained commodity pricing of gold have forced it to slow its expansion and stock plans slightly for overall timing to be just right. Fortunately or not, this is a nice position to be in when witnessing the carnage that many other companies are experiencing.

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