best small cap gold stocks, page-50

CGM..ramping up production this month, & awaiting assay results..

You better pour yourself one for the following Johno247.

Check out the Capital structure & Substantial sh's..

Top 20 hold 64%, one better is that 54% is held by Randal Swick & Savvy Capital Management alone..


Cougar Metals NL is a Perth based exploration company listed on the Australian Securities Exchange (ASX:CGM).

The Company is focused on exploring the highly prospective Alta Floresta gold belt in central west Brazil, where it holds granted tenements covering an area in excess of 1,450km2 and where past production is estimated at five million ounces of gold.

Much of the immediate focus is centred on Ze Vermelho Gold Prospect where the Company has received numerous highly encouraging high grade gold assay results and where it is currently undertaking trial mining, which is providing important information about the structure and grade of mineralisation, whilst at the same time generating strong cash-flows from the treatment of the ore.

The Company also operates growing mineral drilling businesses in Brazil and Uruguay, providing surface diamond, reverse circulation and RAB drilling services to the rapidly growing South American mineral resource industry. The Company currently operates a fleet of 13 rigs with plans to grow this in the near future.

In addition, the Company also holds the mineral rights to the Pyke Hill Measured plus Indicated Resources of 14.7mt @ 0.9% Ni March 2008).

Directors Randal Swick –
Chairman Jeff Moore –
Director Paul Hardie –
Director Senior Management Randal Swick –
Managing Director Michael Fry –
CFO & Company Secretary Jayme Leite – Exploration Manager

Capital Structure Shares on Issue: 406,223,576 52 week range: $0.02 - $0.11

Substantial Shareholders

Savvy Capital Management – 34.06%

Marcia Swick – 19.61%

Top 20 – 64.84%

https://trading.nab.com.au/ComNews/20111101/01236617.pdf


Broker Research Note - Patersons
07 Oct 2011

Purring along Investment Highlights

* Emerging diversified drilling contractor CGM recently posted EBITDA of $5.9m for the year to June 2011 and is in the process of expanding its rig fleet to take advantage of growing demand from clients in Brazil and Uruguay. With new rigs being put to work and based on conservative utilisation we believe CGM is well placed to grow the drilling business again in FY12.

Preceding a number of short-term catalysts we highlight that CGM is currently trading at a 26% discount to the global drilling peer group excluding the company's gold assets.

We maintain the SPECULATIVE BUY rating.

* Strategy. CGM is currently engaged in two competing capital intensive activities. After having grown the drilling business to a respectable size we believe CGM will pursue a divestment either via an IPO or trade-sale to focus capital on its exploration and development pursuits. In the meantime relatively small-scale production is generating gold sales of circa $1.0m per quarter.

* Free option on gold assets. CGM's current fully diluted market cap. of $24.4m implies a forward EV/EBIT multiple of 4.8x on our forecast. Meanwhile we estimate the average for an international peer group of drilling companies currently at circa 6.5x. On this basis we believe that negligible value is being attributed to the company's gold assets in the current share price.

* Gold assets. The mineral assets of CGM are based in Mato Grosso State in western central Brazil. CGM has commenced trial mining of the Ze Vemelho underground mine and is yielding very high grade ore of +60g/t average. The company recorded gold sales of $US2.2m for FY2011, which is funding ongoing exploration of the region.

* Catalysts. 1) New contracts; 2) Positive drilling results; 3) Quarterly cashflow reports; 4) Divestment of drilling business. * Key risks. 1) Client concentration (approximately 67% of drilling revenue exposed to Zamin Ferrous); 2) Commodity price weakness. Disclosure: Patersons Securities Ltd acted as lead manager and underwriter to CGM's November 2009 placement and rights issue which raised $5.5m. It received fees for this service.

http://www.cgm.com.au/assets/Broker-Research-Note-Pattersons.pdf

Cheers

Sheeza