I thought we would also drop to those numbere if 1220 are didn't hold. Now the question is was the gap due to unexpected news? If so it may not fill. The interesting thing is the HUI issued a buy signal when it reentered the Bollinger bands. Now the gold charts in some are saying bottom is in. Eery chart watcher has their own set of guide lines, one in a while they get violated.
I looked at the current risk reward and decided I was not waiting for a pull back. I would sooner pay a little more an have it vs. not getting it or paying way more. I am a long term holder so will not be flipping for a point. That doesn't mean I will not sell from a much higher point when I sense a major pull back is occurring. Always nice to have some free shares.
Caledonia Mining Corporation (CALVF) Whats there not to like - 2015/16 has been a transformational year for Caledonia mining -
Caledonia are currently completing a $65m expansion and refit at the Blanket mine –
The development changes completed underground was completed in late March and will begin to flow through to the bottom line in 2016.
Gold production will increase on the back of increased ore tonnage and grade as ore from No.6 Winze area and the decline into AR South is increasingly hoisted and processed.
This will reduce cash costs, and increase profits (PBT more than doubled from 2015) and cash generation will then increase.
2016 is only the beginning
The sinking of the new Central Shaft continues.
Once completed it will transform the economics of the mine as the AR Main and AR South orebodies can be properly accessed at depth and the infrastructure capable of taking production over 80koz/a gold.
The Blanket mine (and Caledonia) will then become a producer of scale.
The Essentials are as follows....in USD
1..Shares o/s ............52 million
2.Debt........................$7 million
3.Cash........................$13.3 million
4.2015 production...............42,500 oz
5.2015 AISC........................$950 per oz
6. 2016 forecast production........50,000 oz
7.2016 forecast AISC...................$850 per oz
8..2017 forecast production.........65,000 oz
9 2017 forecast AISC .................$750 per oz
7.Gold Resources,......................1.1 million oz
Dividend..........was just increased to 1.375 US cents per quarter or about 7 cents per year in cad. Further annual increases are expected
VALUATION
Assuming $1300 POG in 2016 and AISC costs of $850 /oz, will have operating earnings of about $22 million US on sales of $65 million US.
In C$, this converts to about $28 million or about $0.53 per share.
Of this, approx 50 % will convert to net earnings of about $0.265 per share in 2016.
With a strong balance sheet, rapidly increasing production, concomitant with declining cash costs, and paying an increasing dividend, CAL should be acorded peer EPS multiples above 15 times for its 2016 forecast production.
Discounted for risk, this amounts to a near term fair value of about $3 per share, with further upside as production increases to 65,000 oz in 2017 and progressively to 80,000 oz per year subsequent to 2017. by rock07 @ another BB-forum -
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