CTO is reasonably well insulated from any downturn in the US gold price, provided the Aus$ exchange rate keeps up the good work. Their costs are in Aus$ and they have already purchased most of their capital equipment (which would have come from overseas presumably in US$ contracts). They are getting record high Aus$ gold prices (+A$1,200 per oz) with operating costs below A$500/oz (target A$350). Comments from bankers I spoke to at Mining 2008 conference in Brisbane a few weeks back (Westpac, Commonwealth, HSBC, Macquarie)suggested exchange rate could drop to 55 to 58 cents before rising slowly to 70-75 cents in the next year. This will put Citigold in a great position over the next year, with high cash flows in Aus$. They should be profitable within 6 to 9 months once gold production exceeds about 25,000 oz/year(A$25-$30 M in revenue, A$12-$15M in free cash flow).
CTO Price at posting:
21.0¢ Sentiment: Buy Disclosure: Held
