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NGF has hedged just under 50% production (70k oz pa or 280,000 oz in total) to mid 2012 at $A 875 per oz. So this limits the upside somewhat.
I had been avoiding high cost WA producers but took a punt on NGF this week. Cash costs at Paddington are about $650 but should reduce with BMM takeover and general mining / processing improvements.
Assuming $625 cash cost, hedged production provides annual cash flow of $17.5m. Assuming $A 1200 gold price, unhedged production of 80k oz provides additional $46m pa.
Paddington underground and Mt Morgan will see production ramp up toward 250k in the next year or two. BMM property also provides a heap leach deposit.
I trust the management and think they're straight shooters looking after shareholders. Big mill strategically located meaning they will cherry pick other explorers like BMM for a song (sad for these explorers but that's capitalism for you when there's no money about).
IMO this company will survive and become a very significant producer in the next decade. Market cap is $60-70m or thereabouts, which is quite incredible.
Rowingboat
