Santacruz Silver Mining Ltd
Posted: September 3, 2013 Filed under: Mexico, Silver, Speculative | Tags: Mexico, Ounce, Record producer, Rosario, San Felipe, Santacruz Silver Mining, Silver, TSX Venture Exchange Leave a comment
Olimpia – Rosario Central (Photo credit: juze1980)
SCZ : TSX-V : C$1.37 SPECULATIVE BUY
Target: C$3.00
COMPANY DESCRIPTION:
Santacruz Silver Mining Ltd. is a junior silver developer focused on the advancement of the Rosario project (100%, Mexico), the
San Felipe project (100%, Mexico) and the Gavilanes project (100%, Mexico). Through the development of the Rosario project,
we forecast production of 1.3 million ounces of silver-equivalent in 2013, growing to 4.7 million ounces of silver-equivalent in
2015 through the development of the San Felipe project,.
Investment recommendation
We maintain our SPECULATIVE BUY recommendation on the shares of Santacruz Silver Mining with a 12-month target price of C$3.00, unchanged.
Investment highlights
Santacruz reported Q2/13 financial and operational results. In Q2, SCZ produced 13,855 ounces of silver, 337 ounces of gold, 296,127 pounds of lead and 8,932 pounds of zinc, from 5,075 tonnes of ore.
The Q2 throughput fell short of our forecast of 7,000 tonnes of ore milled as a result of a slower ramp up of sulphide ore production.
At the start of the underground development at the Rosario mine, Santacruz mined through a section of oxidized material, which the company stockpiled during the quarter, but which also resulted in lower than expected ore available for the mill. Since the company replaced its mine contractor, advancement of the main decline has improved. As of mid-August, the main ramp intercepted the Rosario I vein and is expected to extend to the Rosario II vein by the last week of September 2013. While the ramp up in production at the Rosario mine has been slower than expected, the company remains
confident that it can advance the mine to a cash flow positive situation before the end of 2013. The company reiterated its
guidance of ramping up throughput to 500 tpd by the end of Q1/14.
Valuation
While Santacruz is working through some growing pains at its Rosario mine, we remain confident that the company can advance the mine into a cash flow positive situation over the next six months. We continue to believe that the growth potential associated with the San Felipe and Gavilanes projects, which should provide high margin growth with low
associated capex over the next three-to-four years, are significantly discounted in the current share price. SCZ remains one of our preferred emerging producers in the junior silver space. We continue to value the shares of Santacruz Silver based on a 0.9x multiple to our estimate of NAVPS (7.5-10%, US$23/oz Ag) of C$3.24, down from C$3.28.
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SilverCrest Mines Inc.
Posted: July 18, 2013 Filed under: Silver, Speculative | Tags: Charge-coupled device, Gold, Gold mining, Mexico, NAVPS, Ounce, Silver, TSX Venture Exchange Leave a comment
Silver-209840 (Photo credit: Wikipedia)
SVL :
TSX-V : C$1.73
SPECULATIVE BUY
Target: C$3.25
COMPANY DESCRIPTION:
SilverCrest is a junior silver producer with a 100% interest in the Santa Elena silver-gold mine in Mexico and a 100% interest in the La Joya silver-gold-copper project in Mexico. Santa Elena is ramping up to produce an estimated average of 4.6 million ounces of silver-equivalent per year by 2014E through the development of an underground operation and facility at Santa Elena.
All amounts in C$ unless otherwise noted.
Investment recommendation
We maintain our SPECULATIVE BUY recommendation on the shares of SVL with a 12-month target price of C$3.25, unchanged.
Investment highlights
SilverCrest reported Q2/13 production of 194,022 ounces of silver and 7,463 ounces of gold, beating our forecast for production of
167,000 ounces of silver and 8,780 ounces of gold. The beat was attributable to higher throughput (307,091 tonnes vs. our forecast for 273,750 tonnes) and slightly higher silver grades (65.99 g/t silver vs. an expected grade of 63.25 g/t silver).
Gold production was impacted by lower grades in the first half of Q2 (1.48 g/t gold vs. an expected grade of 1.75 g/t gold) and lower recoveries (51% vs. our forecast of 57%). Grades improved throughout the second half of Q2, and are expected to remain between 1.5 to 1.75 g/t gold throughout H2/13. Recoveries are also expected to improve in H2. SVL plans to release Q2 financial results on August 14.
Construction of the new 3,000 tpd CCD facility continues to advance on schedule and budget with approximately 65% budget committed.
The major foundations have been poured, and the CCD tank and thickener construction is near completion. All major items have been delivered. Underground, approximately 2,000 metres of development has been completed. The company has recently encountered significant water flow underground, which remains manageable and will be addressed in an upcoming hydrology study.
Valuation
This was a solid quarter for SVL. The company continues to grow production throughout 2013, while development of the new CCD facility
continues on track and budget. After updating our model for the Q2 production, our estimate of NAVPS (5%, US$23/oz Ag) decreased to
C$3.59, from C$3.60 previously. We continue to value the shares of SVL based on a 0.90x multiple to our estimate of NAVPS (5%, US$23/oz Ag).
SilverCrest Mines Inc.
Posted: May 31, 2013 Filed under: Silver, Speculative | Tags: Canadian dollar, Gold, Mexico, Ounce, Santa Elena, Silver, Silver as an investment, TSX Venture Exchange Leave a comment
San Mateo of Santa Elena, Yucatan (Photo credit: Wikipedia)
SVL : TSX-V : C$1.88
SPECULATIVE BUY
Target: C$4.00
COMPANY DESCRIPTION:
SilverCrest is a junior silver producer with a 100% interest in the Santa Elena silver-gold mine in Mexico and a 100% interest in the La Joya silver-gold-copper project in Mexico. Santa Elena is ramping up to produce an estimated average of 4.6 million ounces of silverequivalent per year by 2014E through the development of an underground operation and facility at Santa Elena.
All amounts in C$ unless otherwise noted.
10+ YEAR MINE LIFE POTENTIAL FOR SANTA ELENA
Investment recommendation
We maintain our SPECULATIVE BUY recommendation on the shares of SVL with a target price of C$4.00, down from C$4.25 previously.
Investment highlights
A reserve and resource estimate for the Santa Elena mine outlined an 8.2 million-tonne reserve estimate at a grade of 1.24 g/t gold and 74.9 g/t silver, containing 327,000 ounces of gold and 19.7 million ounces of silver. The reserve represents roughly a 50% increase in gold reserves and a doubling of the silver reserves for the mine.
This gives Santa Elena an 8-year reserve life with indicated and inferred resources potentially extending the mine life to 10+ years.
The new reserve grade is a blend of open pit, underground and leach pad material. This gives Santa Elena the potential to produce 4+ million ounces of silver-equivalent over a 10+ year mine life, up from roughly 6.5 years previously, with upside potential associated with the El Cholugo and El Cholugo Dos discoveries, by exploiting satellite deposits and by high-grading the underground operations to increase near-term production.
Valuation
From our perspective, this reserve/resource update for Santa Elena is an important milestone for SVL. A potential 10+ year mine life should
address concerns about the previously limited mine life for Santa Elena. While our valuation of Santa Elena has increased, we have significantly
reduced our in situ valuation ascribed to the La Joya project to account for the drop in market values for silver development projects. After
adjusting our model for reserve/resource updated at Santa Elena and our downwardly adjusted valuation of La Joya, our estimate of peak silver price NAVPS (5%, US$32.50/oz Ag) has dropped to C$5.40, from $5.42 previously. We continue to value the shares of SilverCrest based on a 0.75x multiple to our peak silver price estimate of NAVPS (5%, US$32.50/oz Ag).
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SilverCrest Mines Inc.
Posted: May 22, 2013 Filed under: Silver, Speculative | Tags: Canadian dollar, Gold, Mexico, NAVPS, Ounce, Santa Elena, Silver, TSX Venture Exchange Leave a comment
English: Silver bullion bar 1000oz bottom view / view from underneath (Photo credit: Wikipedia)
SVL : TSX-V : C$1.80
SPECULATIVE BUY
Target: C$4.25
COMPANY DESCRIPTION:
Silvercrest is a junior silver producer with a 100% interest in the Santa Elena silver-gold mine in Mexico and a 100% interest in the La Joya silver-gold-copper project in Mexico. Santa Elena is ramping up to produce an estimated average of 4.6 million ounces of silver-equivalent per year by 2014E through the development of an underground operation and facility at Santa Elena.
All amounts in C$ unless otherwise noted.
Investment recommendation
We maintain our SPECULATIVE BUY recommendation on the shares of SVL with a 12-month target price of C$4.25, unchanged.
Investment highlights
SilverCrest reported Q1/13 EPS of US$0.06. After adjusting for deferred revenue of US$0.5 million and a foreign currency gain of US$0.5 million, results were in line with our forecast of US$0.04.
In Q1, SVL sold 157,088 ounces of silver and 7,370 ounces of gold, from production (pre-released) of 153,481 ounces of silver and 7,225 ounces of gold. This resulted in cash flow from operations of US$7.7 million or US$0.07 per share, in line with our forecast.
The pre-feasibility study for Santa Elena expansion is expected to be released before the end of May. This study is to include an updated
reserve and resource estimate, as well as an updated mine plan. We expect to see an increase in mine life from 6.5-years to roughly 10 years. Development of the new 3,000 tpd CCD processing facility remains on schedule and on budget for commissioning in early 2014. With grades expected to increase and strip expected to decline in H2/13, we expect SVL to meet its 2013 guidance for production of 625,000 ounces of silver and 33,000 ounces of gold.
Valuation
SVL is on track to ramp up production from 2.2 million AgEq ounces in 2013 to 4.6 million AgEq ounces in 2014 with the commissioning of the
new CCD processing facility. After adjusting our model for the Q1 results, our peak silver estimate of NAVPS (5%, US$32.50/oz Ag) decreased marginally to $5.42, from $5.43 previously. We continue to value the shares of SilverCrest based on a 0.75x multiple to our peak silver price estimate of NAVPS (5%, US$32.50/oz Ag).
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What Happens When Costs Match the Selling Price Of Gold ?
Posted: May 15, 2013 Filed under: Speculative | Tags: Business, Gold as an investment, Lake Shore, LSG, Ounce, Precious metal, Share price, Timmins Leave a comment
Map of Timmins, Ontario (Photo credit: Wikipedia)
LAKE SHORE GOLD
(T-LSG) $0.325 n/c
From $ 4.00 two years ago
One look at the two-year chart of Lake Shore Gold shows you how bad things are in the natural resource sector, if you didn’t know already. Lake Shore Gold is not the only story trading at nearly one-tenth of where it was.
The bad part of that is much of the company’s current building and mine development was financed with issues nearly ten times today’s price.
Hard to believe the Timmins Times featured an article on January 22nd with the headline, “Glittering year ahead for Lake Shore Gold says VP Dan Gagnon.”
Well at least their production numbers appear to be going up as their Timmins West Mine is the centre of three mines expected to be in operation
having done 85,000 ounces last year. The article quotes Gagnon is expecting 120,000 to 135,000 this year and 150,000 ounces in 2014. But can they make any money at it?
The suggestion these days is that there’s many mines with costs of production way up at $1250 to $1450 and that doesn’t leave a lot left. According to the Timmins Times article, the suggestion is that their costs of production is between $800 and $875 an ounce. As one looks at the share price, one wonders wouldn’t one? Or is it just that most people have given up on the precious metals sector. Not precious at all anymore.
Lake Shore is important to the folks of Timmins and area as the company has 500 full-time employees, 200 contractors at the mine and 125 other employees working on the expansion projects. And this work tends to pay well, or at least it did.
The very low stock price makes one wonder if there are some tidbits of bad news about to happen. Higher production costs, write-downs or even losses that will be coming out tomorrow at their annual meeting. For sure, it won’t be a bunch of happy people around if anyone even bothers to
show up.
Meanwhile one service suggests that several analysts follow the stock with the average target being $1.17. Really?
When was the last time a speculator made a buck in the precious metals market listening to analysts?
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Orezone Gold Corporation
Posted: May 1, 2013 Filed under: Speculative | Tags: Burkina Faso, Canadian dollar, Feasibility study, Gold, Gold as an investment, Ounce, Share price, Toronto Stock Exchange Leave a comment
Gold Feet (Photo credit: @Doug88888)
ORE : TSX : C$0.74
SPECULATIVE BUY
Target: C$2.25
COMPANY DESCRIPTION:
Orezone Gold Corporation is a junior gold exploration and development company under the stewardship of Ron Little, President and CEO. The company’s flagship project is the 5.2-million-ounce Bombore gold project in Burkina Faso.
Investment recommendation
We maintain our SPECULATIVE BUY recommendation on Orezone Gold with a revised 12-month target price of C$2.25, down from C$3.65
previously.
Investment highlights
Orezone reported an updated resource estimate for the Bombore Gold project in Burkina Faso. Based on 67,023 metres of additional
drilling (404,648 meters total), the project hosts a global resource of 158 million tonnes grading 1.03 g/t gold, containing 5.28 million ounces of gold.
Measured and indicated resource has increased by 10% to 4.56 million ounces of gold, which includes 1.96 million ounces of oxide gold resources (a 12% increase in oxide material). Strip for the measured and indicated oxide resource is approximately 1.3:1, with an expected mine life of 10 years.
Valuation
This resource will form the basis for the upcoming Feasibility Study (expected H2/13), assessing the potential to develop Bombore in a twophase
approach focused on oxide material initially. In light of the recent drop in the gold price and gold equity values, we have adjusted the dilution assumptions in our model to account for ORE’s lower share price. The net effect is a drop in our estimate of peak gold price NAVPS (10%, $1,750/oz Au) to C$4.35, from $5.59 previously. Given the recent pullback in the gold price and the risks associated with attaining our one-year peak gold price target, and due to financial liquidity concerns, we have lowered our target multiple to 0.50x, from 0.65x previously, which gives us a target price of C$2.25 (rounded), down from C$3.65 previously.
Detour Gold Q1/13
Posted: April 11, 2013 Filed under: Juniors | Tags: Company, Detour Gold, Detour Lake, DGC Records, Gold mining, Ontario, Ounce, Toronto Stock Exchange Leave a comment
Detour Gold (Photo credit: Wikipedia)
TSX : $16.45
Detour Gold reported Q1/13 operational results at its Detour Lake mine in Ontario.
The company announced that its production line began on January 12, 2013, with first gold pour on February 18, 2013. The company’s second production line started on March 9, 2013. Gold production for the quarter totalled 16,841 ounces. In the last week of March, with both grinding lines in operation, the mill averaged more than 36,000 tonnes per operating day, largely without the use of the secondary crushers.
As previously reported, all of the main operating units are fundamentally performing as expected. The valuable startup experience of the first production line was effectively applied to the second production line and results are steadily improving despite lower than expected overall plant availability. The focus will now shift to adjusting and optimizing both secondary crushers’ by-pass chutes and shuttle conveyors, which is necessary to increase availability and daily throughput levels to plant design.
This work is expected to be completed in May 2013. DGC disappointed the market on production guidance, as it had given a roduction guidance of between 350,000 to 400,000 ounces of gold for 2013 and total cash costs of between $800/oz and $900/oz to be reported after commercial production is declared. The company now believes that producing 350,000 ounces of gold will be at the higher end for 2013 production and will update its guidance in the second quarter. The company still expects to reach commercial production in the third quarter of 2013.
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New Gold New Resource Estimate
Posted: April 9, 2013 Filed under: Exploration Companies, Speculative | Tags: Blackwater, Canada, Feasibility study, gold investments, late 2013, New Gold, Ounce, Toronto Stock Exchange Leave a comment
Gold-d06-150b (Photo credit: Wikipedia)
NGD
TSX : $8.77
New Gold released a new resource estimate for its Blackwater gold project in central B.C.
The new resource estimate includes an additional 89 holes (22,220 m) when compared to the year-end 2012 resource estimate. The majority of the additional holes were infill in the southeast portion of the deposit, increasing confidence in the resource modeling and driving the increase in the Measured resource category.
Excluding stockpile material, Measured and Indicated gold resources now stand at 8.62 million ounces grading 0.88 g/t from 8.07 million ounces grading 0.85 g/t previously. Inferred gold resources grew slightly to 340,000 oz grading 0.76 g/t from 310,000 oz previously. The big increase was in the Measured category which jumped 46% to 3.9 million ounces at an average grade of 1.04 g/t, up from 2.67 million ounces grading 0.94 g/t.
The updated resource will be used for the company’s feasibility study, which is expected to be completed in late 2013.
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Alamos Gold Update ; New Mineral Reserves
Posted: April 3, 2013 Filed under: Gold, Intermediate Producers | Tags: Alamos, Gold, Gold as an investment, Mexico, Natural resource, Ounce, Toronto Stock Exchange, Turkey Leave a comment
Gold Thailand (Photo credit: @Doug88888)
AGI
TSX : $14.03)
Remember the…
Alamos Gold reported new mineral reserves and resources for its Mulatos Mine and satellite deposits in Mexico, along with its Agi Dagi mine and development projects in Turkey.
In 2012, the company successfully replaced minedout mineral reserves at Mulatos, with total proven and probable reserves of 2.37 million ounces of gold at year-end. The replacement of reserve ounces is attributable to the addition of new ounces at El Victor, conversion of pit-contained mineral resources to mineral reserves, and the use of a $1,400 per ounce gold price assumption compared to $1,150 in 2011.
At the company’s Agi Dagi mine, Alamos reported an increase of 9.9% to 2.44 million ounces of gold, as compared to the mineral resources reported in December 2011. In addition, Measured and Indicated mineral resources of silver increased 16.9% to 19.72 million ounces compared to the resource update in December 2011.
The increase in Measured and Indicated mineral resources is a result of a combination of infill and resource expansion drilling programs ndertaken in 2012, resulting in the conversion of Inferred mineral resources to the Indicated category.
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Endeavour Mining Corporation SPECULATIVE BUY
Posted: April 2, 2013 Filed under: Africa, Gold, Speculative | Tags: Burkina Faso, Endeavour Mining, Gold, Mali, Ounce, Tabakoto, Toronto Stock Exchange, Youga Leave a comment
English: Map of Burkina Faso Español: Mapa de Burkina Faso (Photo credit: Wikipedia)
EDV : TSX : C$1.50
SPECULATIVE BUY
Target: C$3.25
COMPANY DESCRIPTION:
Endeavour Mining Corporation is a mid-tier gold producer with a 90%-interest in the Youga gold mine in Burkina Faso, a 90%- interest in the Nzema gold mine in Ghana, an 85%-interest in the Tabakoto gold mine in Mali and an 85% interest in the Agbaou gold project in Cote d’Ivoire. We forecast production of 324,000 ounces of gold in 2013, growing to 431,000 ounces of gold in 2014, through the development of the Agbaou mine.
All amounts in C$ unless otherwise noted.
Investment recommendation
We maintain our SPECULATIVE BUY recommendation on the shares of Endeavour Mining with a revised 12-month target price of C$3.25, down
from C$3.50.
Investment highlights
Endeavour reported a Q4/12 EPS loss of US$0.06. The Q4 results were impacted by several one-time expenses associated with the Avion acquisition, the retirement of the Avion debt, and the reduction of the Tabakoto and Nzema hedge books. Excluding these unusual items, EDV had an adjusted Q4 loss of US$0.01, falling short of our EPS forecast of US$0.03 on higher than expected minesite costs.
In Q4, EDV sold 68,721 ounces of gold, from production (prereleased) of 68,299 ounces of gold at an average cash cost of US$1,032. While we were expecting cash costs to increase in Q4, average costs of US$1,032/oz were significantly higher than our forecast of US$894/oz. Costs are expected to come down over the course of 2013 as the company institutes cost savings initiatives and completes the expansion of the mill at its Tabakoto mine, and as the company accesses higher grade ore at Nzema.
EDV reiterated 2013 production guidance of 310,000 to 345,000 ounces of gold; however, cash cost guidance increased to US$840- 880 per ounce, up from C$790-830/oz previously, as the company expects the high costs seen in Q4 to remain at elevated levels in Q1 and trend down over the course of the year.
Valuation
We have adjusted our model for the Q4 results and to reflect the higher costs forecast at the Nzema and Tabakoto mines in 2013. The net impact is a drop in our estimate of peak gold price NAVPS (5-10%, US$1,850/oz Au) to C$4.67, down from C$4.93 previously. We continue to value the shares of Endeavour based on a 0.70x multiple to our peak gold price estimate of NAVPS (5-10%, US$1,850/oz Au). We note that EDV is currently trading at only 2.0x 2014E CFPS and 0.44x P/NAV (5- 10%, spot) compared with the junior producer average of 6.5x 2014E CFPS and 0.67x P/NAV (5%, spot).
AMP Gold and Precious Metals Portfolio 