some research from bgf

Nice to see they put out a research note as this should help steady peoples fear. Lets hope management take note of some of BGF's suggestions...
particularly this one -

Effective communication to the market is essential to achieve an upwardly mobile share price. Not only must there be good announcements, but companies need to make personal contact with analysts, brokers and investors to make sure they understand and appreciate what is going on. Having BGF hold a view is one step, but the Company needs to convince others as well. The Company is aware of this and is seeking to address the shortfalls on the communication front, but we will be more confident when we see this happening in earnest.



CARRICK GOLD QUARTERLY MAIN POINTS AND COMMENTS

Overall it was a positive quarter with $0.65m being spent on exploration with 37 holes for 4,863m of RC and diamond drilling. Results of this work are expected to be released beginning early May, with the Spargoville drill results to be the first news item. Cash at the end of the quarter was $23m.

1. Pre-Feasibility Study

The PFS is continuing under the control of Golder Associates, a consulting firm known for its conservatism. Results were expected prior to the close of the quarter, but a recent release had already said that it was taking a bit longer and it now appears that it wont be out until May. Note the following;
i) it is not unusual for independent studies like this to take longer than expected
ii) the study is only looking at three pits at Lindsays, Kalpini and Brilliant. Resources falling outside these pits are not within the scope of the study. A stage two study will incorporate these later.
iii) the brief is to model resources sufficient for a 100,000 oz p.a. mine, with a life of approx. 10 years. It is thought that pits depths of 100-120m should be sufficient to capture this sort of mineable resource. Pit designs are within the brief, but they cannot be called reserves yet, as this is not a full feasibility study. Nevertheless, they will point to mineable resources.
iv) While there is a resource of 4 mill. oz released to the ASX, a large proportion of this would fall outside the design parameters for the first pit. They will come into play later, in deeper pit designs and underground extensions.

2. Spargoville Drilling

CRK has drilled 26 holes in the recently acquired Spargoville Project over a distance of 500m. The aim is to connect near surface drill results with deeper drilling conducted previously, with a view to being able to calculate a JORC resource. Historical drilling has reported intercepts of 12m @ 3 gpt, 5m @ 27 gpt and 7m @ 3.3 gpt.


Comments

While we can be disappointed that the PFS is taking 2-3 months longer than originally expected, and people can be impatient, there is no reason to be viewing the stock negatively. There has been no downgrading or negative news out there. Thus there is no fundamental reason for the share price being so low. Nothing has changed to alter our view that the stock is cheap.

We believe there continues to be an opportunity for a significant re-rating of the company once the PFS comes out. This will answer the questions of the sceptics in the market place. It will give the Company the ammunition that it needs to market itself, both to investors and potential new employees and operators that will be needed in the near-term as CRK seeks to commercialise its projects.

Effective communication to the market is essential to achieve an upwardly mobile share price. Not only must there be good announcements, but companies need to make personal contact with analysts, brokers and investors to make sure they understand and appreciate what is going on. Having BGF hold a view is one step, but the Company needs to convince others as well. The Company is aware of this and is seeking to address the shortfalls on the communication front, but we will be more confident when we see this happening in earnest.

The Spargoville drill results will be interesting. All of our discussions suggest they will be good, but we obviously havent seen any results - they havent been released.

Overall, we still see that the shares offer good value at these levels with the critical catalyst being the PSF. Short term impetus may come from Spargoville drill results, due out within the next two weeks. We would not be sellers at these levels.