DEZ Breakout
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DEZ breaking out big time ($3.19). Rumors are flying. Not sure what is happening, could just be it catching up with the other gold stocks.
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DEZ got a brokerage house upgrade yesterday (see below). The CEO is also on ROBTV today.
I do believe that DEZ is catching up too....
JWB
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INITIATING COVERAGE
Desert Sun Mining (DSM : TSX : $2.98) - Buy - Target: $6.20 Steven Butler
Comment: The rising sun; initiating coverage on Desert Sun with BUY and top
pick
Desert Sun is a junior gold producer/explorer with a focus on Brazil. The
company's key project is the Jacobina property along the Bahia Gold Belt in
Brazil. Past production at Jacobina was 670,000 oz at an average grade of
2.62 g/t between 1983 and 1998; low gold prices, strong local currency, and
poor operating performance forced the mine to close. However, Desert Sun's
efforts have resulted in a restart of commercial production on July 1,
2005, and a substantial increase in resources which currently total 5.3
million oz. Our 2006 EPS and CFPS estimates are C$0.05 and C$0.15
respectively. Our earnings and cash flow estimates increase to C$0.33 and
C$0.64 in 2009 which reflects a full year at the maximum mill capacity of
10,000 tpd when production is derived from three main areas - Joao Belo,
Morro do Vento/Morro do Vento extension and Canavieiras. We are initiating
coverage of Desert Sun Mining with a BUY (and top pick) rating given the
company's deeply discounted share valuation, excellent production growth
profile, and re-rating potential from explorer to producer. Desert Sun's
shares are trading at a very low multiple, 0.58 times our 5%/$534 spot gold
NAVPS of C$5.18. Our C$6.20 target price reflects a 1.2 times multiple of
our 5%/$525 peak gold NAVPS of C$5.12.
