A steady flow of good news, wondering if they want share price appreciation to fend off a possible takeover. Obviously a cashed-up, mid-tier producer with a monster resource is a good target!
Full year results: Not going to speculate on what the reported NPAT will be, but I expect operating cashflow to be 60million (including administration, exploration etc.).
Operating margin of approx 300/ounce on 200,000 ounce Giving total cash costs of 850-900 (all inclusive) and realised prices between 1150 and 1200. Eyes absolutely light up when you consider the eventual expiration of the hedgebook and production increases that are already underway (this will be a cash machine by 2013!).
Upcoming events:
*** Plant upgrade to 6.5MTPA Will be interested to see the actual operating results from the upgrage given the current plant was already operating significantly above nameplate capacity.
At the higher headgrade of 1.2g/t: 6.5MTPA- 7MTPA --> 250-270K ounces (which will be a big boost to the bottom line).
Am also looking forward to further plant upgrades
*** Exploration and resource delineation If we can further delineate the resources into reserves 10mill ounces + @ 400 ounces pa gives a 25 year mine life! Judging from recent exploration (including 17m from zero metres at 2g/t) indicates that there is plenty more shallow gold on the tenements.
*** King- King 20% ownership of St. Augustine Gold & Copper who are on an absolute monster resource.
The following technical paper gives the ins and outs of the resource- and by the looks of it looks very commercially viable. I honestly wouldn't mind if CGX looks into acquiring more/takeover (at a reasonable price of course) given the managements obvious capability with projects of this size.
http://www.sagcmining.com/en/kingking43_101.pdf
*** Overall this is one for the long-term/bottom-drawer, sitting on an absolute cash cow. No need to go hunting around for gold, just need to delineate what's already there, keep increasing our throughput and watch the cash roll in.
For what it's worth- by 2013 assuming 300K+ production, POG 1450 and expiration of hedgebook, the free cashflow alone will be 180million (though it wouldn't surprise me if was more!).
CGX Price at posting:
$2.67 Sentiment: LT Buy Disclosure: Held
