valuation 19c todays close 10c up 6.4%

ABN Upgrades SMC Gold To Buy
February 04 2005 - Australasian Investment Review – (AIR)

SMC Gold (SMO) continues to strengthen its balance sheet. ABN AMRO Morgan suggest operational improvements at its Punitaqui plant indicate that this particular project and the broader strategy of exploitation of mid-sized Chilean copper gold projects have potential to add substantial value.

SMO will spend an estimated $3m upgrading the Punitaqui plant, the broker reports. This will improve metallurgical recovery by up to 15% (copper recovery is currently 60-80%, gold 60-85%) and more importantly, the broker says, produce a higher grade of copper concentrate. Higher recoveries will increase the recovered metal value per tonne of ore, and the higher copper concentrate grade will substantially reduce transport costs and treatment and refining charges.

Asset sales and an underwritten rights issue have placed SMO in a position to fund the upgrade of the plant to 1,500tpd. Successful implementation leads to the broker’s target price of $0.19, and the broker has rerated the stock from Add to Buy (High volatility).