Cumberland Resources (CLG)

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CUMBERLAND RESOURCES (CBD : TSX : C$2.55) - SPECULATIVE BUY - 12-MONTH
TARGET PRICE: C$3.75
Graeme Currie
Comment: Cumberland reports on improved metallurgical testwork and announces the results of a resource revision
Cumberland reported improved metallurgical recoveries, from feasibility level testing, for their Meadowbank gold project. Recoveries now exceed 93% and reagent consumption has dropped by 90%, which could result in a large operating cost savings. The company also reported revised resources within the Portage pit area that are now estimated at over 1.9 million ounces. In total, resources at Meadowbank now exceed 3.5 million ounces.
Cumberland remains a top pick with a SPECULATIVE BUY rating and a $3.75 target price. Yesterday's release continues to imply that further improvements through ongoing feasibility study work may reflect positively regarding capex and operating cost improvements at Meadowbank. The feasibility study is due for completion in late Q4/03 or early Q1/04.

Preliminary results to date suggest that improvements to our cash flow model can be achieved. We plan a thorough review of our model in the summer. With the latest resource revisions at Meadowbank, net in situ ounces for Cumberland at Meadowbank and at their 22% held Meliadine West project now total 4.4 million.