Croesus - Latest Bullish Report

Paterson Ord Minnett in their Weekly Report dated 8th May, 2002 have issued a positive report on Croesus Mining NL in which, at 72 cents, they mark it as:

SHORT TERM: BUY

LONG TERM: OUTPERFORM

Some of the highlights of the report include:

“In the 3 months since the merger CRS has been able to strip approximately $100 per ounce out of its cash costs of production and has made remarkable progress in delineating additional ore reserves that are amenable to open cut and underground exploitation.”

“Gold production for the March quarter was a total of 69,148 ounces ….. Production is forecast at similar levels in the June quarter before ramping up to around 80,000 oz per quarter in the September and December periods as the Daisy open pit is brought into production at Norseman.”

Patersons predict CRS will in the 2003 and 2004 FY pay a 4.2% fully franked dividend of 3 cents a share.

Net profit in 2002 is placed at 9.8 million …. Growing to 18.9 million in 2003

“Croesus has $32m in cash as at March 31 and has a fully drawn $20m facility provided by Macquarie Bank.

“The March quarter illustrated the strong cash generation ability of its operations with its cash balance increasing by around $14m”

“Paterson’s believe that the FY 2003 numbers are more indicative of the “new” Croesus. With earnings per share forecast at 6.6 cents and gross cashflow per share of 17.3 cents, Croesus is trading at extremely undemanding multiples.”

“ … we believe that the exploration results at Norseman clearly indicate that there is a huge potential for ore reserve additions at Harlequin and Bullen..”

Gold operations at Norseman have had “a 67 year history of continuous gold production and exploration results thus far have been nothing short of highly encouraging.” Patersons included a chart showing “the history of the goldfield and how production from each discovery has consistently exceeded the stated reserves at commencement of mining by large factors.”

Cost cutting measures have also been successfully implemented …. The workforce has been reduced from 209 to less than 160 …. and monthly operating costs have been reduced $800,000

THE BOTTOM LINE?? - In my opinion, this is a stock to hold for the long haul ... 72 cents will be very cheap by this time next year.