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GoGold Resources GGD.v Mexico Project has “Low Gold Price Resilience”
Wednesday September 10, 2014, 4:00pm PDT
By Teresa Matich+ - Exclusive to Gold Investing News
First I've heard of this company but the PEA shows US$150 Million NPV and an IRR of 58% with a CAPEX of $32M due to existing infrastructure.
Now sit down for this one, AISC is estimated at $699/oz over the life of the mine. Now this story I am interested in. CM
GoGold Resources' Mexico Project has "Low Gold Price Resilience"Canada-based gold and silver producer GoGold Resources (TSX:GGD) definitely had plenty of reasons to be happy today. The company released the initial preliminary economic assessment (PEA) for its Santa Gertrudis project in Mexico, and the numbers are impressive, to say the least.
Highlights from the report include a net present value of US$150 million and a post-tax internal rate of return (IRR) of 58 percent with a payback period of just 1.7 years. Initial capital expenditures are set at $32 million for the project, including a 20-percent contingency, while after-tax net cash flow will come to $232 million.
Contributing to that low capex is the substantial amount of existing infrastructure at Santa Gertrudis. The past-producing mine stopped operating in 2000, but features “numerous pits already stripped with haul roads,” making it almost “ready to start mining.” GoGold intends to develop the project as a 7,500-tonne-per-day heap leaching facility fed by several open pits, with the mine expected to produce an average of 56,000 ounces of gold per year over a projected 12-year mine life.
Additionally, the mine is anticipated to have a low, all-in sustaining cash cost of just $699 per ounce of gold.
GoGold’s president and CEO, Terry Coughlan, commented on the results in today’s release, stating “[w]e are extremely pleased with the results of the initial PEA study for Santa Gertrudis. The large increase in gold ounces along with the robust economic opportunity to develop our second low cost producing mine in Mexico, substantiates the reasons why the company was so eager to secure this gold project for our shareholders.”
How low can you go?
Even more interesting for investors to note is the base-case gold price that the company used to get such impressive numbers for its PEA. GoGold took it down to $1,250 per ounce, giving investors plenty of confidence in terms of the project’s ability to weather varying market conditions.
Furthermore, should gold continue to fare poorly, investors should still see a substantial return on their investment in GoGold, with the company stating in its announcement that Santa Gertrudis will have “low gold price resilience.” Essentially, even if gold drops to $1,000, the project will still have a hefty IRR of 34 percent.
Opportunity to expand
Although GoGold released a fairly recent updated mineral resource estimate for Santa Gertrudis in June, the company announced a substantial resource increase again on Wednesday. The indicated resource increased by over 33 percent, while the inferred resource went up by 80 percent. That rise was mostly due to revised economic and optimization paramaters for the PEA.
However, Coughlan also said that the project could be expanded further, stating that Santa Gertrudis, “has the potential for exploration upside and additional gold ounces through targeted exploration.” Certainly, investors will want to watch GoGold to see what the company gets up to in terms of advancing its Mexican project.
What’s next?
Speaking to what investors can expect next from GoGold, Coughlan stated, “[o]ur strategy, as it was with our initial low cost producing Parral Mine that went from grass roots to production in under twenty four months, is to fast track this second project, the Santa Gertrudis gold mine into production.”
In addition to Santa Gertrudis, GoGold has various holdings in Mexico, including its San Diego exploration property and the Parral tailings project, which is currently in the commissioning phase of production.
GORO Dr Air GORO is hot to diversify and get back into Nevada where they have plenty of experience. They will only involve themselves with potential very high grade properties.
CSQ Canamex is very high grade and GORO can only hope that the results are not to good, to fast, as they dont have the cash to outbid Heckla right now. They would like nothing better though, to eventually be in a position as you said, to gain them both.
Gold Resource Corporation's Vice President of Exploration, Mr. Barry Devlin stated "At Radar, a suite of geologic features and physicochemical conditions are present for the formation of both replacement-type and bonanza-grade vein-type gold deposits similar to the Paradise Peak and Goldfield mines. These mines are also in the Walker Lane Mineral Belt and well known for their significant and high-grade gold-silver production. The similarity in alteration, geochemistry, and structural fabric to Paradise Peak and Goldfield indicate excellent potential for discovery of a new gold-silver deposit at Radar."
On a Paridise Peak search, I noticed the Paradise Peak Mill equipment is for sale.
http://www.wardenterprise.net/page3.html
GORO- Another article to remind me why I should buy more shares.
http://seekingalpha.com/article/2483465-gold-resource-corp-profitable-gold-and-silver-production-with-a-monthly-dividend?app=1&uprof=44
Gold Resource Corp: Profitable Gold And Silver Production With A Monthly Dividend
Sep. 10, 2014 2:39 AM ET | 2 comments | About: Gold Resource Corporation (GORO), Includes: GDX
Disclosure: The author is long GORO. (More...)
Summary
Gold Resource Corp. is a profitable gold and silver producer based in Mexico.
The company's profitability means it can pay a solid monthly dividend to shareholders.
Huge exploration upside, an undervaluation of shares and a solid dividend make Gold Resource Corp. a strong buy at current levels.
Gold Resource Corp. (NYSEMKT:GORO) is a precious metals mining company which owns 100% in six potential high-grade gold and silver deposits in Mexico's southern state of Oaxaca. The company targets projects that feature low operating costs and high returns on capital, with a primary goal of producing cash flow and returning money back to shareholders via dividends.
Gold Resource Corp. first declared production in July of 2010 from a high-grade open pit at its El Aguila project. The following year, the company announced production from its polymetallic La Artista vein system.
With nearly $30 million in cash, low-cost, high-margin production from current operations, multi-million ounce gold potential on its properties, a tight share structure with 54 million shares outstanding, and a solid monthly dividend, I believe Gold Resource Corp. is poised to outperform the benchmark gold miners index (NYSEARCA:GDX) as the company continues to deliver on its objectives. Over the longer term, I think shares hold at least 100-200% upside potential, depending on where the price of gold and silver heads.
Gold Resource Corp. Key Statistics
Recent Stock Price: $5.41
Shares Outstanding: 54 million
Market Cap: $292 million
52-Week Range: $3.52 - $8.60
Net Cash Balance: $30 million
Debt: $3.1 million (capital equipment leases)
Enterprise Value: $264 million
(Credit: Yahoo Finance)
Why Gold Resource Corp?
Gold Resource Corp. is a gold and silver miner that is truly focused on profitability from operations and returning capital to shareholders via dividends.
The company's El Aguila project, located in Mexico, is highly profitable despite the big dip in gold and silver prices over the past 3 years. For the first 12 months in initial production, the project produced $36 million on starting capital of $34 million, according to the company. Even in recent times, the mine is still profitable, with cash flow from mine operations of $19.4 million in the second quarter of 2014.
The company has delivered consecutive monthly dividends since July 2010, for a total of $1.86 or $99 million in dividends returned to shareholders. This is huge for shareholders as the dividends can be re-invested and dollar cost averaged with a lower share price, providing downside protection. The company targets a 1/3 distribution of cash flow from miner site operations to dividends. Currently, the stock yields more than 2%.
In addition, the company has managed to maintain a very tight share structure of 54 million shares outstanding, not having to dilute shareholders during the drop in price of gold and silver. So if gold and silver were to take off in price and the company achieves its objective, shareholders can realize far greater gains than if the company had issued shares during the downturn. In addition, management owns 7% of the company.
Gold Resource is aiming to produce close to 125,000 gold equivalent ounces in 2015, which would be a 20-25% increase from 2014 levels. First-half 2014 all-in sustaining costs were impressive at $826 per ounce - far lower than 2013's total of $1,263, when the mill was being constructed. The company remains on track for 2014's production estimate of 85,000 to 100,000 ounces at sub-$850 all-in sustaining costs.
Second Quarter Results Impressive; Stock Appears Undervalued
Gold Resource Corp. reported solid Q2 2014 results. The company reported revenues of $33.7 million and net income of $7.8 million ($.14 EPS) on 24,172 ounces of gold equivalent production.
The net income was due to decrease in total cash cost per ounce of 32% year-over-year. With $.14 EPS on a yearly basis of $.56, and a current share price of $5.40 the company has a P/E ratio of 9.64. Even with full-year EPS of $.40, the stock would still have a low P/E ratio of 13.5.
Other key highlights include $19.4 million in cash flow from mine site operations, $1.6 million in dividends paid out ($.03 for the quarter, paid monthly), and a $438 total cash cost per ounce sold. With approximately $75 million in annual cash flow from mine operations and an enterprise value of $264 million, the stock is currently valued at just 3.52 EV/CashFlow.[color=red][color=red][/color][/color]
The company is also healthy financially; cash and equivalents for the quarter ended totaled $29.6 million increasing 98% during the first six months of 2014. These results were solid, even though the gold and silver prices realized decreased by 7.9% and 17.4%, respectively, year-over-year. Debt obligations are just $3.1 of capital equipment leases.
What are The Risks?
Gold Resource currently has just a 3 year mine life estimate at La Arista, based on a proven and probable reserve base of 381k gold equivalent ounces. This is a very small reserve base for any gold miner.
However, the deposit remains open for exploration on strike and depth and additional work is ongoing to potentially increase the resource estimate and extend the life of mine. I am very optimistic that the company will be successful in this regard. Drill results include super-high grades of 2,600 g/t silver and 27 g/t gold over 2.85 metres. Other results outside of the current resource include .85 metres at 6.98 g/t gold and 139 g/t silver, and .73 metres at 9.9 g/t gold and 598 g/t silver. Rock chip samples at the Las Margaritas property showed silver values as high as 4,150 g/t and 7.76 g/t gold.
The bottom line is that there very good potential to increase the life of the mine and resource base at Gold Resource Corp's properties.
I'm Buying Gold Resource Corp - Even at $1,250 Gold and $19 Silver
Gold Resource Corp. is profitable, undervalued and pays a nice-sized dividend for a company of its sized. With huge exploration potential at its properties, I also feel the company could at least double its life of mine and increase gold equivalent production to 150,000+ ounces. In the meantime, shareholders can re-invest the monthly dividend and wait until higher gold and silver prices come.
I am a buyer of shares below $6 and think investors shouldn't wait to initiate or add to their positions.
Dr Air, Ouch on AUM.t AUMN. Looks like market does not like the financing. I saw it coming. When I saw your list with my name, I was going to post Golden Minerals was the only company I didnt feel confident on, for the short term. When they were .50 previously with $30m cash, they were a screaming buy. From the contest on the shares being in the $1.20 range recently, they were dead money and will be for awhile.
Now on the other hand, they have tremendous assets and I have met the mgt 2 times. I like them. Cash flow wise, they were tremendously in the gutter due to closing of Velardena. Long term, that was probably the best thing to happen as they were able to eradicate their old inefficient inherited unionized labor force that was doing about 1/3 the work they were supposed to do. They had $15m cash, and I think they used it wisely for the future in the streamlining of operations, finishing the development of the ramp and the 9000 meters drilling, that netted new high grade veins outside the current NI43-101. They are guiding for mine cash costs between $12 and $15 dollars (half what they were) and yearly cash flow of about $5 to $8 million per year at $20 silver and $1,250 gold when they are fully ramped up mid 2015.
Recently the company just spent $1.5M on this micro producing mine 20 KM from other company operations. I suspect they will, further drill, widen the ramp and use the ore to feed the Velardena mill.
Golden Minerals Announces Acquisition Of Santa Maria Mine In Mexico And Drill Results From Los Azules GOLDEN, Colo., Aug. 12, 2014
All in all, I think they are doing a good job surviving and preparing for the future. This was a $29 stock. A long ways off but, If they set things up right at Velardena, get something going ( sale or JV) with their premium El Quevar project in Argentina, get a moderate bump in the POS, I think they could cruise back to $29
I'll leave my shares parked and pick some more up on the first site of success. 3.69M units at $0.86 each Still only 47M OS.
Checkmate28
EXN.t EXLLF Excellon resources New Presentation Sept
Since I dont see production increases coming from current resource nor do I see them operating more efficiently than they already are, either of 2 things need to happen.
Either Silver needs to raise, or they need to expand the available resource and continue proving out the CURD discovery.
They are cash flowing well now, even with these low silver prices. They are restarting exploration with a 10k meter drill program paid from their cash.
Slide 17
SEISMIC SURVEY 2D test survey over known mantos – results pending
3D survey to identify potential manto targets – upcoming
MANTO DRILLING Discover new mantos using seismic data
– potential to dramatically increase Platosa mine life
They have one of the best BOD with Peter Crossgrove and on the exploration side, there is nobody that knows this area better than
Peter Megaw. If they find the CURD source, which the company says HAS to be their, Excellon value will be highly elevated. As for now, while we wait, we have to suffer with probably the most efficient 2+ million oz Silver producer out there with a miniscule MC of $70 M
Still a good entry but Dr Air pointed out, the best short term entry being about 1.15 just passed.
Checkmate28
GOFORTHEBET, SAS STADF I agree. I looked hard to find a reason not to buy.
From the Q2 conference call
Revenues down 9% (may be part the reason for SP dip)
Operating costs below guidance
Net Earnings 600k
Cash Flow 5.5M
Spending some of their cash on Taylor development, ramp, bulk sample ect, plus drilling, should provide the growth in production going forward. Taylor is high grade and the bulk sample will bring in revenue as well. Im happy with the spending and they have the cash and strong balance sheet to pull it off.
Im thinking of adding myself.
Im waiting on a call from IR 2 days now.
Sorry Im not a subscriber and their fore cant reply to PM
Take care CM
Dr Air, Carisle Gold vs Gowest Gold Thanks for that weekend assignment. CGJ.TO: I follow that one closely as it is a direct comparable to GWA.v Gowest Gold. Both with advanced projects and are Close in market cap. Carisle is cheap, has a great resource, good mgt, good jurisdiction and good infrastructure as does Gowest. Carisle will need 190M CAPEX to produce in 2019 whereas Gowest will need about 50m to produce in 2016. 190M going to be a Tough find today. Currently CGJ is at 400M FD shares and will probably need to consolidate down the road. Carisle would be a pit, where as Gowest would go underground, first by ramping down for the high grade ore near surface, and later sink a shaft using cash flow.
I think the planets are aligning, and GWA.v is in a good position right now. The market is looking for low CAPEX, Hi grade, Hi IRR projects. GWA has most of the hard work done and will be producing 95k oz in 2016 from a CAPEX of $50 million more, using the available Xstrata Glencore Kidd mill in Timmins to process the ore. Older PEA shows 50% IRR at $1200 gold with the contract processing option. Update coming. If true, those numbers are near the best available in all the market.
http://web.tmxmoney.com/article.php?newsid=68855598&qm_symbol=GWA:TSV
http://www.gowestgold.com/wp/wp-content/uploads/2013/02/Corporate-Presentation.pdf
Gowests Bradshaw resource has 1.5M ozAu @ 5gpt (3 gpt cutoff) open on strike and at debth. The 1300m strike is nearly the largest in the entire Timmins area. This is from just 1% of their land. They have 17 other targets with Bradshaw type signatures. Due to the heavy over burden in the area, previous technology could not find the gold. Ive seen a geo magnetic fly over map. The whole area is hot. Once they start cash flowing at Bradshaw, they will continue drilling out the other targets and expanding.
I dont think the market understands whats going on. YESTERDAY 98% of share holders voted for an equity financing that will raise $4M now and another $4.5 million if the warrants get exercised AND ONLY 5K GWA shares traded. They are 100% under the radar.
At first I was negative on the current round of equity financing. It allows the Chinese investor (Fortune Holding) to become a 1/3 equity partner for $8.5M (if all warrants get exercised at .11) Share count will blow out to around 250 million when all the warrants exercise. Gowest will be funded to complete the pre feas, push the permitting process and basically get the project to shovel ready. This will subtract from the total CAPEX needed. The key is, being fully permitted with Pre Feas in their hand sets them up for fair financing.
Through conversations with the company mgt, whom I've learned to trust, I see this as a JV deal that brings in the new partner (fortune Holdings). My guess is, after the Pre Feas and permitting, partner Fortune Holdings will probably facilitate, a non dilutive loan to the company for the balance needed to get the underground ready and the Kidd line rehabbed for producing the Gowest ore. They may even fund a massive drilling program to create value for their investment. Another option is either Xstrata finance the mill rehab or AC will step in with needed cash.
If this works out, CEO Greg Romain will look like a genius in this market.
Another thing I love about GWA they have their own on board, first class technical team as well. VP ops Darrin Konnigen and Garth Wilcox designed, built and commissioned the El Castillo Gold mine that was sold to Argonot Gold and made share holders alot of money. Insiders including Darrin Konnigen own a lot of shares purchased on the open market as well.
Whats the future value of a 100k profitable producer at $1800 gold? According to the PEA, they could cash flow around $28M at $1200 gold and $75million at $1800 gold. Thats what high grades do.
Give them 8x CF for a premium jurisdiction and they value out at $600 Million FV. That would be a 20 bagger even avter dilution is factored in. Then realize that they will grow from there. If the ore sorting works, they could produce 150k - 200k oz from the same ore.
I am not advocating anyone to buy this without realizing GWA is more risky then most all the plays on this board, and I might be brain washed from being so close to this company the past few years.
I own this company mostly because I believe in this resource and the company mgt to move the project without ripping off the shareholders. Through this market, they have survived and moved forward by doing what they said. No one knows GWA, but that will change real soon. Put them on your radar.
Checkmate28
Dr Air, RIC I got mine at 1.63 US. Was going to sell RIC as well, but asked myself, would I buy a 80k oz producer in a top jurisdiction, with $54M annualized CF, cash costs near $800, that is ready to bump production to the 120k oz/year level in 2015 with longer term plans for 200k oz, that has $30m cash and an EV value of $85M now ?? The answer is YES, so I chose not to sell today. If it runs much higher I might go for the trade. Thanks for bringing that to my attention.
Checkmate28
GORO Having a nice day. Short Interest
At some point this has to come into play. GORO shares going up are here to stay for a while. Looking forward to the 7/30 update
http://www.nasdaq.com/symbol/goro/short-interest
Shares Short
7/15/2014 4,916,637 550,841 8.925692
6/30/2014 4,933,436 1,058,881 .659103
6/13/2014 5,242,530 476,581 11.000292
5/30/2014 4,826,508 579,414 8.329982
5/15/2014 4,799,743 1,053,837 4.554540
4/30/2014 4,791,707 340,769 14.061452
4/15/2014 4,776,953 475,774 10.040383
3/31/2014 4,538,235 705,037 6.436875
3/14/2014 3,904,251 582,905 6.697920
2/28/2014 3,545,263 494,612 7.167766
2/14/2014 3,506,843 606,377 5.783272
1/31/2014 3,076,609 486,989 6.317615
1/15/2014 2,960,880 381,689 7.757310
goforthebet, I did pull up the presentations before I posted and thought paramount was one I should look at. Its a matter of the precious time. Feel free to summarize why you like it.
goforthebet Nice list there. FYI Because of time constraints, I mostly follow with high due diligence, the minors from Canada and mexico and therefore understand them best. Because I understand them best, they are best for me. Close 2nd, Im working on understanding Nevada, South American and African minors better.
Outside of these areas I would more follow Certain writers or Dr Airtime as the lead in, and still would be less likely to buy.
Of these listed below, I would rate the first 4 9/10 out of 10 and the last 3 I just do not know. Hope it helps.
PVG
ANV
SA
STADF
PZG
EMXX
GSV
goforthebet I stopped thinking I knew what gold was going to do.
With the triple bottom, I think we have bottomed.
Short term I am hoping for $1400 year end with a slow recovery
IMO In the long term increasing money supply, has to lead to MUCH higher gold. Its not a matter of IF, but rather when.
Gold prices will lead to many minors being 10 baggers and we will spend time here looking for the ones that haven't moved yet. Thats how I am invested.
Any large world events could change things fast.
Further to ANV plus RIC, all the property's are operation safely in Nevada USA. If they do the full expansion in 2015 to 500k oz production and gold goes back to old levels, Cash flow would be upwards of a $billion. They would use that to push other advanced projects for even more production. If they could find a way to show the market they can produce with lower costs, the shares would explode like Richmont that DrAir just posted on.
RIC, Richmont looks very good to me. New to me before DrAir brought it. I cant see how the shares dont continue up. Future value based on, reduced costs from increased production from the ramp to the high grade island gold is a company changer. Richmont has been operating in Canada for over 20 years.
goforthebet ANV, Since its on my short list and fresh on my mind, Ill reply from memory. Producing about 200k oz now at nearly break even. Looking to expand to 500k in one or 2 phases which will add more debt on top of what they have. If gold takes off, 500k oz is a lot of leverage and cash flow to pay down the debt quickly and stock should get back to the $45 range where it was, otherwise, they could have serious financial problems.
With 25Million oz gold and nearly 900 million oz silver, the Hycroft property could expand ANV into a large company. The make or break is the price of gold.
I dont own it due to the risk, but if gold bottom proves to be in and metals start moving up. I might jump in fast.
Checkmate
GORO (edited) should report earnings today. Im looking for a repeat of Q1 numbers with possibly a small added production volume.
Q1 GORO Posted net earnings of 13 cents per share with cash costs at $422 and AISC costs at $816, cash flow of 17 million and increased their cash supply while paying the dividend.
That would be the 2 great quarters in a row telling the market that GORO has turned things around operationally and new management is doing a much better job. Looking for an update on the Switchback production decision as well. Im very confident their costs will stay very low.
Could have bought GORO at 3.50 early May. Now trading at 5.50
With the Hochschild overhang nearly done, the share should continue up.
kozuh, that's why you stick around here to learn all those big acronyms :)
Bbotcs re GORO, yes that's about what I'm saying. GORO had a good day today while most companies had an off day.
I'm on the beach in Cancun this week and the only shovels I can think of , are the ones filling the blenders with all the fancy colored ice.
GORO up .26 on 5.2 M shares or $27 million in volume today. Looks like Hochschild sold another large chunk of their shares, but someone thought they were worth more than the market price. Was probably arraigned by the company.
GORO has turned things around operationally, but the share price has been lagging. The reason is that Hochschild has been raising money for home operations, selling GORO and causing an overhang on GORO shares for nearly a year. They owned nearly 20% stake in GORO and are now down to between 2 and 3 million shares. One more shot and their done.
Hochschild Mining buys out Peruvian assets
Reuters
October 2, 2013 4:03 AM
LONDON, Oct 2 (Reuters) - Latin American precious metalsfirm Hochschild Mining said it planned to raise up to$96 million to help it buy the remaining 40 percent stakes inits Peruvian assets for up to $280 million.
Remember Q1 GORO Posted net earnings of 13 cents per share with cash costs at $422 and AISC costs at $816. These are nearly sector leading numbers, while they paid sector leading dividend as well.
The best part is the future, as they just doubled the capacity of their mill, and are working on the underground to get production to full capacity of around 150,000 oz/year. The ramped up exploration side is showing good signs, that they will get the mill to full capacity. If the new switchback area draws a production decision, they could be planning for another bump in production in the near future.
Checkmate
LSG Lakeshore Knocks it out of the park with AISC at sector leading $800.
I posted a few times a while back, that Brigus and Lakeshore were a couple in the penalty box companies, that were shoring up operations, and were going to start putting out value as they got it together. Well Brigus came through a while back, and Lakeshore is looking like a solid growth company now.
GORO tops my list, for the company suffering most from previous bad catlyst that has turned things around operationally, but has not responded in share price. I see incredible value in GORO based on recent and upcoming progress.
LAKESHORE GOLD Todays news
Preliminary cash operating cost(1) per ounce sold of US$570 in second quarter 2014 ("Q2/14"), 37% improvement from US$908 per ounce in second quarter 2013 ("Q2/13") - Preliminary all-in sustaining cost(2) ("AISC") per ounce sold of US$810 in Q2/14, 36% better than US$1,257 in Q2/13 - Preliminary total production costs in the second quarter of $33 million - Six-month cash operating costs estimated at US$600 per ounce sold, better than full-year 2014 target range of US$675 to US$775 per ounce -Six-month 2014 AISC per ounce sold estimated at US$890, better than the full-year target range of US$950 to US$1,050 - Total production costs for the first six months of 2014 estimated at $63 million
AUMN Golden Minerals up another +28% to 1.33 today. They were on my trading for cash or less list. I called a 10 bagger a short while back. Got one+ bag in.
OnlY 43 M Outstanding shares. This stock used to trade at $29
They ousted their union crew and are supposed to open the mine this month with low costs. If they show costs near their guidance, it has more room, and share price could easily get up another $. They had 30 million but Cash has to be getting lower with all the shut down and rehab costs.
SAS.v .36 Continues to impress with todays drill results. The share price has responded nice since my post and buy in late May (up 40%). Todays Smoke Deep results are superb. Smoke Deep along with the previous Taylor and Heslop zone, provide a bright future for added resource numbers and increased cash flow in the near future. With the new drill results, I still think SAS provides one of the best values out there at todays price, and that Primero will eventually take a run at SAS. I'll be adding on weakness. Link back for more DD.
Todays News
http://web.tmxmoney.com/article.php?newsid=68856216&qm_symbol=SAS
SAS.v Provides an Exploration Update for the Smoke Deep Zone at the Holloway Mine
Drilling Returns: 13.07 g/t Au over 31.6m (7.43 g/t Au Cut); and 11.10 g/t Au over 8.9m (10.72 g/t Au Cut)
TORONTO, July 8, 2014 /CNW/ - St Andrew Goldfields Ltd. (TSX-SAS) (OTCQX-STADF), ("SAS" or the "Company") is pleased to announce additional drilling results for the Smoke Deep Zone ("Smoke Deep") at the Holloway Mine.
CSQ.v/CNMXF I bought a starter after Gold Resources bought 22 Million shares equal to 18 percent of the Company. The Reids have previous experience in Nevada and are looking for a second mine to compliment their Oaxaca Mexico operation. GORO has been clear, they are interested in high grade operations only. I assumed Jason was privy to information we could not get, and he had to see CSQ as very valuable, to spend the company cash at a time.
Those two new holes were impressive even for an underground mine and this will be a pit. Previously the drill holes were mediocre. GORO can only hope the big holes dont keep coming otherwise Hecla will end this fast.
AUMN AUM.V +25% today after +30% yesterday. I've Been posting on the value of Golden Minerals, pointing out the following facts,
*they were trading at cash in the bank while holding large assets (mill, mine and resources) (good recipe for future gains)
*closing and reopening the mine would wipe out the old inefficient inherited unionized labor problems and leave them more efficient for the future. Time should prove that was an effective decision by mgt as they will reopen with only 1/3 the old labor costs.
*They have a large proven resource, plus advanced exploration propertys
*Shares had traded as high as $28
*Float is very low
June 3rd through June 9th you could have purchased AUMN for .50 to .55 and sold today for +140% in 2 weeks time.
Probably more fairly valued now, until they can prove they can meet their guided costs, at which point they should trade up another %100 even at $1300 gold.
If we get back to $1900 gold, AUMN should see the 10 bagger I predicted back a few posts, link back.
If they are successful in JV ing ElQuvar, you can add even more value.
Checkmate28
AUMN Accidentally posted before I could finish.
I spoke with the company when they closed the mine. They told me they inherited a lazy unionized work force when they bought the Velardena mine and mill. The closure allowed them to hire a new productive workforce and to rehab the entire operation for profitability. They slashed 2/3s of their labor costs and rehabbed the mine, allowing them a good chance to achieve their guiding for Ag cash costs to the $12 -$15 area from the $30 mark they were at.
If they can pull these costs off, shares are a steal even at the newly re-rated share price. When they closed, they had nearly 30 million cash and at one point the shares were trading at less than costs. They have a huge upside at the Velardena mine, plus the El Quevar advanced exploration property in Argentina, and the exploration properties in Argentina and Mexico.
Spoke with Our pal Chen Lin at PDAC a couple years back and as a share holder he very much liked the company value, share structure and mgt before the closure.
http://www.newswire.ca/en/story/1374955/golden-minerals-to-restart-velardena-mining-in-july-2014
GOLDEN, Colo., June 18, 2014 /CNW/ - Golden Minerals Company ("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (TSX: AUM) today announced plans for a July 2014 restart of mining at its Velardena Properties located in Durango state, Mexico. Once mining and processing are ramped up to approximately 285 tonnes per day (tpd) of sulfide ore in mid-2015, the Company expects output of approximately 1.0 to 1.2 million silver equivalent ounces per annum (including silver and gold but excluding lead and zinc), with cash costs between $12 and $15 per silver ounce net of by-product credits. Golden has completed a 9,000-meter drill program at Velardena in vein systems located largely outside the currently defined Canadian National Institute NI 43-101 compliant resource. That drill program represents the first known drilling of the Terneras vein system sulfides in the area below the historic mine workings. The Company's drilling, mine planning and analysis indicate that positive net cash flow may be achieved at the Velardena Properties at current silver and gold prices. An independent engineering firm participated in the preparation of the mining plan.
Chairman, President and Chief Executive Officer Jeffrey G. Clevenger noted, "Our team has worked diligently since the suspension of operations at Velardena to streamline the operation for a restart. A year ago we were looking at cash costs in excess of $30 per silver ounce and now we are excited to begin the ramp-up process to achieve costs and margins based on production at $12 to $15 per silver ounce. Once ramped up, our restart plans show incremental cash for the Company of about $5 to $8 million per year at today's prices (approximately $20 per ounce silver and $1,250 per ounce gold) as compared to holding the property for the future."
Dr Air GORO You might want to add to your DD list. After a year of CAPEX spending from cash flow, while continuing to pay sector leading dividends, they have doubled their mine production capacity, rehabbed the mine and still have no debt. While they were in the penalty box 2012-2013, 2014 will see continuous increasing throughput as they open more stopes and possibly get a production decision on Switchback.
Sorry my formatting did not take.
GORO...DPM.V Comparison
GORO 1st number DPM.V 2nd number
Share price NOW..... 4.51 ... 4.71
EV .......................... 227M est... 740M est
Q1 2014 Net income. .13/shr ... .07/shr
Q114 Cash Cost net... $422 ... $573
Q1 AISC................... $816 ... $1048
QI Cash Flow............. $17.4 M ... $6M
Debt......................... $0 ... $115M
Cash........................ $20m ... $36m
Jurisdiction............... Mexico ..... More risk areas
At 1/3rd the EV, GORO provides incredible value NOW,especially if you believe they can keep or improve the numbers
As to the Ni43101 official resource. Dont worry, GORO has the gold. They never needed to drill to far out, as they never needed the big number to obtain financing. They only need to map out three years our or enough to feed the mill.
GORO should increase production steadily throughout the year as they continue to fill the mill production. I could see a rate of near 140- 150k by year end.
Checkmate28
Dr Air Impressive move by Mandalay, makes a solid company more solid if they can optimize the new mine. As to ore sorting for Mandalay, have they spoke of using this, or were you concluding that it may be beneficial due to the 2 different ores? My understanding is that you need a specific set a circumstances to overcome the costs of the technology.
As to my knowledge of ore sorting, I can only speak for Gowest's case. The sorting equip reads the atomic signature on the fast moving ore along a conveyor belt. Airjets reject the wast ore, therby moving the same gold in half the ore.
In Gowests case, it detects the arsenopyrite that contain less then .3gpt gold and rejects the rest. In two Gowest tests, it has proven highly effective at rejecting +50% of the waste rock while losing only 1-2% of the gold.
This allows for a lower cut-off grades thus increasing overall ounces in the ground.
The 50% that is rejected, does not have to be hauled to the mill, nor run through the mill saving considerable costs, and allowing for either smaller processing equipment or doubling the capacity of the mill.
In Gowests case, the potential exists to more than double the gold content in the crushed rock sent to the processing facilities from 6 g/t to 12-15 g/t.
Gowests 2012 PEA concluded, that WITHOUT ore sorting, 95,000oz could be processed with a 1500tpd operation using contract processing, costing $60 million CAPEX and netting an IRR of 55% with $1200 gold. In todays market, it doesn't get better than that.
With ore sorting, they could potentially double the ounces with the same 1500tpd mill.
I'm understanting, negotiations with XStrata and AC are alive and well. If Gowest closes this private placement, that cash will take them through permitting and get them the updated PEA. At which point, they will finalize the contracts. I expect, that when GWA has completed the hard work, and the updated PEA reconfirms the IRR, Xstrata will jump in head first.
Now how did this turn into a GWA post? ;)
SAS.v St Andrew Goldfields
Another way to look at them is their EV/Insitu oz.
With a 2.81 million oz resource and $70Mill EV, SAS comes in at less than $25/oz in the ground making them a clear cut leader here.
Financially, a great balance sheet and strong cash flow make them one of the strongest, if not strongest small company producers in the Abitibi region.
Based on current results so far, I see the Heslop drilling making them a cant resist for Primero.
SAS.v St Andrew Goldfields Whats not to like esp with the hot price right now.
I was able to buy STADF a couple times today at .2435 US funds, but chased them off. Still bidding to finish the fill.
Maybe the cheapest EV for a cash flowing safe jurisdiction Canadian producer.
2013 produced 100k oz, ADDED TO CASH, REDUCED DEBT
Q1 2014 Held the production rate and brought AISC to $1085
They have near $34 mil Cash plus an untapped low interest credit line.
EV near $70mil.. Cant think of a safe jurisdiction producer any cheaper
Not a sexy company with the spread of their operation, but their efficient, with good mgt and the numbers work.
Lot of production upside coming with their High grade Taylor development project. Ramping down now for the 2nd bulk sample.
There heslop mine borders the south end the Brigus/Primero Black Fox Complex has some real good intercepts as they are pounding their own north border.
Would be a natural for Primero to take a run at SAS
Checkmate28
Better hope Canamex doesn't find to much to fast or somebody will scoop it up before GORO has enough cash to do anything.
I can see GORO holding back on raising divy to increase cash.
Nevada Mining regulations have softened while Mexico just added the new mining tax.
Lojack, Either you had me read wrong or I misread your last post, but I was laughing with you at Zacks for flipping, not at you.
Follow the link below for math supporting 10% forward annual divy yield on shares bought at these levels based just off Q1. Another angle for the re rating of the shares. To get back near the 4% DIVY, shares would trade near $12 as you said.
That doesnt include increased production past the current 1150tpd
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=101902709
Cheers
LOL Lojack
Heres another laugh. The GORO short position as of 4/20 was over 15% of the float. If they sold HOC all there shares, things would work better for everyone. The last of the dark clouds over GORO would be gone
http://www.nasdaq.com/symbol/goro/short-interest
Switchback, they are at 450 M strike which is the same strike Arista
had when they made the production decision.
All they need is enough cash from Switchback to pay for the costs of the exercise. They are near that now.
If they make the decision, they will either break even and pull the plug, or Switchback will successfully add to the mill output.
GORO Responding nice. Up 35% first hour. I think were witnessing the beginning of a short squeeze.
Nearly 16% of the float was short before today.
http://shortsqueeze.com/?symbol=goro&submit=Short+Quote%99
Short positions dont stand a chance if GORO continues to grow CF by increasing production and decreasing costs. I expect both to improve through the next few quarters. Since GORO pays a divy based on 1/3 their CF, they should regain their position as highest yield divy payer, for gold producers.
Q114 - GORO posted $17.4 million Cash Flow from Mine Site Operations
Potential yearly Divy
Annualizing Q1 CF would get 68 Million CF/YR! If GORO paid 1/3 back in divys that would be 1/3 x 68M or 22.1 Million back to shareholders. With 54 Million OS, we get .42 or 10% yield if you bought at the open today. Thats going to get some attention.
Now thats the value I saw coming. Much more progress coming IMO
Checkmate28
GORO, Gold Res.Earns .13 w/$422 Total cash costs. Nice quarter, setting up for the nice turn around as I've been posting. Even better was getting the shares well under $4 after getting the dip I was expecting. GORO had everyone fooled and was the biggest laggerd of 2014. IMO just getting started in proving they are one of the stronger values out there. Quality over quantity as they are done with the mill expansion doubling capacity paid 100% from CF, and well on their way to mine developments that will steadily increase the throughput of 7 to 10gpt AuEq ore. They are targeting 950 AISC for 2014 and Im hearing rumors of 850 AISC as they furthur clean up operations. New high grade Switch back target 500m away, may get them to the new increased full capacity faster then they thought.
2014 Q1 HIGHLIGHTS
23,734 ounces mill production, precious metal gold equivalent
..Total cash cost of $422 per precious metal gold equivalent ounce (including 5% royalty)
..Total cash cost decrease of 18% from Q1 2013 and 38% since Q4 2013
..$17.4 million Cash Flow from Mine Site Operations
..Net income of $6.7 million, or $0.13 per share (this rate should translate to an increased divy +.04 based on their divy formula)
..Dividend distributions of $1.6 million, or $0.03 per share for quarter
..Cash and Cash Equivalents increased $4.5 million from prior quarter
1,159 tonnes milled per day, a 28% increase from Q4 2013
Still about 440 tpd from capacity.
Is it May 1st?
EXN.t EXLLF Excellon reports net earnings of $1.9 million from Q1 2014 and continues to grow its Cash Stash for acquisition.
TORONTO, April 29, 2014 - Mexico's highest grade silver producer, is pleased to report financial results for the three-month period ended March 31, 2014.
Q1 2014 Highlights
Revenue of $10.5 million (Q1 2013 – $10.1 million)
Sales of 624,953 AgEq ounces (Q1 2013 – 476,281 AgEq ounces), including 383,782 oz Ag, 2,482,210 lbs Pb and 2,877,156 lbs Zn
Mine operating earnings of $2.7 million (Q1 2013 – $4.1 million)
Net income of $1.9 million or $0.03/share (Q1 2013 – net loss of $0.6 million or $0.01/share)
Cash flow from operations of $2.1 million or $0.04/share before changes in working capital (Q1 2013 – loss of $0.6 million or $0.01/share)
Total cash cost per silver ounce payable of $11.76 (Q1 2013 – $9.09)
All-in sustaining cost ("AISC") per silver ounce payable of $17.28 (Q1 2013 – $24.06)
Cash, marketable securities and current accounts receivable totaled $9.1 million at March 31, 2014 ($7.0 million at December 31, 2013)
Working capital totaled $11.8 million at March 31, 2014 ($10.3 million at December 31, 2013
Dr Air GWA financing. More to think about. Of the 60 million needed GWA has already spent some of that on the infil drilling and engineering work. Possibly they might need another $50 mill. They wont need it all up front.
Gowest handles the feasibility permitting with a equity raise
Xstrata mine rehab (10 - 15 mil)- hopefully Xstrata finances this
Underground costs plus ramp and infrastructure (about 30 mil)plus
Contingency money??? $10 million
GWA needs the above $40 mil
AC kicks in an upfront pmt for the rights to the tailing 10million? and gets to toll GWA for refining and builds the refinery on their own dime.
Snippet: UC hired a firm to find Chinese investors to help fund their increasing Canadian operations and they have a history of raising money. Humm?? Xstrata/Glencore is highly motivated to fill the empty production capacity, as GWA is the only project large enough to make it worth while. The city of Timmins is on board because their economy is at risk of losing 1000 jobs if Xstrata Kidd mine closes. With the players involved, their are many possibility's.
So now Gowest is short about $30 million.
Just thinking out loud here, and it will probably happen differently, but this scenario is easily plausible. I'll say it again. Gowest is going to move forward.
Checkmate28
Dr Air, GWA I see them chipping away on the Cash needs, while they finish getting shovel ready. Possibly an equity raise or maybe a stream deal like you mentioned. I think they will stay smart about it.
When the bulk sample and feasibility prove up the old numbers or better, I see suitors standing in line to finance GWA. Smart, Low CAPEX, high grade, projects are in favor now.
On the outside chance, somebody might want to come in and JV a 3000 to 5000tpd mine/mill to produce 200k ounces per year from the git go.
Eventually, once Gowest does the hard work, I could see Xstrata Glencore writing a check to buy the Gowest Bradford project.
Whats a 95k oz cash flowing producer with big upside worth with $1500 - $2000 FP gold?
CF has to be $50 mil ... At 10 x CF, thats going to net a MC of $500 million? If along the way, they nearly double the OS to 300 million, that's still 1.66/share future value. Now There should be many other companies able to do this with higher FV gold but for me, this is one I understand very well and most importantly, trust mgt.
On another front, Due to contract obligations, we are going to get some drill results out of their Transition property this summer. Probably paid for by flow through money.
Just my opinions and speculations
Checkmate28