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Stonecap Securities ups Aurcana target price to $1.20 as La Negra expansion on track

by Joyanta Acharjee
10:16 am Feb. 22, 2012



Stonecap Securities Wednesday increased its price target on Aurcana (CVE:AUN) to $1.20 from $1.10 after the junior miner raised its ownership in the Mexican La Negra mine to 99.86 percent.

Aurcana is a silver explorer with interests in the Shafter silver mine in Texas as well as La Negra. Its partner in La Negra has been diluted down to a 0.14 percent ownership interest.

The company's management has confirmed that the mill expansion plan for La Negra is on track and almost complete, with a target date of the first week of March for completion.

In a research note, Stonecap analyst Christos Doulis said: "Aurcana is poised to enter the ranks of mid-tier silver producers in 2012. While we have now factored in the mill expansion at La Negra, the company’s expansion plans at Shafter could increase production beyond our current forecasts."

Aurcana's previous successful expansion at La Negra to 1,500 tonnes per day (tpd) and Stonecap's recent dialogue with management has increased confidence that the expansion to 2,500 tpd capacity at La Negra is on track, and should result in an average throughput rate for the mine of 2,000 tpd in 2012 and 2,500 tpd, thereafter, the capital markets firm said.

Aurcana's recent marketing efforts have focused on the expansion scenarios for both La Negra and Shafter, Stonecap said.

"While we are taking a more cautious view with Shafter (given that it has yet to be commissioned) and are maintaining our 1,500 stpd life-of-mine throughput rate assumption for the operation, successful implementation of the company's expansion plans at Shafter could increase production significantly beyond our current forecasts," Stonecap's Doulis said.

http://www.proactiveinvestors.com/companies/news/25284/stonecap-securities-ups-aurcana-target-price-to-120-as-la-negra-expansion-on-track-25284.html