CRK.TO simply has not taken off while so many others have lately. Is this a sign that its a dog to remain a dog, or perhaps a pause to take advantage of? I have no position, but will keep watching it closely.
FWIW, Grandich has an update today on his take:
Grandich Client Update – Crocodile Gold, Has Adversity Created Opportunity? First the bad news. The Croc has clearly disappointed so far in 2010. To say anything else would be unfair. The good news? Despite falling short, they have come a long way in less than a year. As a recap to those of you who may not be familiar with Croc, Croc paid only US$9 an ounce to acquire a large 2,500 km2 land package in the Northern Territory of Australia, great infrastructure including a few processing facilities and has over 5 million ounces of gold in resources. They are currently producing from the Howley, North Point and Princess Louise open pit mines and the Brocks Creek underground mine, and are developing the Cosmo underground mine.
The Cosmo underground mine and development is the real future of the Company and its crown jewel. Is expected to be in full production in mid-2011 and offers the potential of 100,000 ounces a year of low cost production just from Cosmo.
Croc put out some encouraging news today that they may have some near term targets directly adjacent to their Union Reefs mill. The good news about this is that if they can do the work to get these smaller targets into production, it could have a direct impact on reducing their operating costs as these targets are within kilometres of the mill, which means minimal haulage costs. Their current average haulage distance from the operations to the mill is about 80 kilometres, so haulage makes up a larger chunk of their costs. The two areas are the Union Reefs area and the Pine Creek area. Over 800,000 ounces were mined in the Union Reefs area in the past from 12 open pit operations, and in looking at some of the historic drill intercepts in their press release, it looks like there is still some encouraging upside potential in this area. Historical production in the Pine Creek area has yielded over 750,000 ounces of gold production from six open pits and some limited underground production. Croc is going to be completing the necessary prep work over the coming months to bring one or more new projects on stream.
They also produced 8,100 ounces of gold in August reaching 50,000 ounces year-to-date. They plan to produce over 9,000 ounces in September and to reach their target for the third quarter of 25,000 ounces.
As I’ve noted before, Croc’s share price has been volatile for some time, and I have had many questions about this from justifiably concerned shareholders. Most start-ups are not without their problems, and I would advise shareholders to focus on the month by month reliability and improvement in production especially during the remainder of 2010. We also need to keep our eye on the bigger picture and potential of this company, especially the progress of the Cosmo development where we should expect some Cosmo ore starting to be fed to the mill in the 2nd quarter of 2011 coinciding when we should see a ramp up in overall production and lower operating costs. There are not many other emerging producers as young as Croc and with a similar growth profile. Croc plans to produce 85,000 ounces of gold this year and expects this to increase over the coming years while at the same time decreasing costs.
Crocodile Gold personnel are actively researching historical exploration information and I expect that there will some news soon on some of this potential. With such a large land package there is significant potential for them to increase their resource base and expand production.
We can continue to cry over spilled milk or concentrate what’s in front of us. Management has clearly made some missteps but I will give them credit in that they have not deviated from the importance of developing Cosmo for the future. They have really ploughed through a lot of the start up operating issues and are now starting to see them hitting their targets. In my discussions with management, I know they are totally focused on increasing production and reducing costs. If they deliver we can see that value reflected moving forward.
