Allied Nevada Gold Corp ANV-T
Share Price… $43.11
Shares Out… 89.2M
Fully Diluted…
Market Cap… $3.9 Billion
Q2 Production Highlights
Production… 22,783 ozs gold; 93,211 oz’s silver
Cash Costs… $459
Net income… $3.6M
EPS… $0.04 / $0.16/year annualized
PE… 260
Allied Nevada has a massive gold silver project in Nevada at the Hycroft mine. The project has 10.2M in Proven & Probable reserves and an additional 10.4M oz’s of gold in the Measured, Indicated and Inferred category for a global resource of 20.6M ounces of gold. The mine also hosts significant silver along with the gold resource of close to 700M oz’s of silver. The gold equivalent resource of well over 30M ounces sets ANV’s Hycroft mine apart as one of the larger gold and silver projects entering into production this decade. The project has a run rate once in full production projected at 556,000 oz’s of gold and 27M ounces of silver from 2015 to 2024 with cash cost expected at ~$304 per ounce.
The company will be growing production from the current 125,000 ounces in 2011 to 275,000 in 2012 before leveling out at 320,000 oucnes in the years 2013 and 2014 before full production entering 2015. Cash costs at ANV are set to be steady between $450 and $475 per ounce before declining to $304 per ounce once Hycroft is in full production in 2015. The silver component to Hycroft makes ANV an attractive early stage Nevada gold producer that is both growing production and levered to silver. The price ratio of silver to gold is projected to continue to decline to less than 30:1 giving ANV a 1.5M ounce gold equivalent production profile.
Notes...
- Industry leading cash costs
- Excellent production growth profile
- Highly leveraged to silver.
- Production
- 2012… 275,000
- 2013 -14… 322,000 oz’s au
- 2015 – 2024… 556k oz’s Au; 27M oz’s Ag
- Reserves
- 10.2M oz’s
- Cash Costs
- 2012 -14… $450 - $475
- 2015 - 24… $304
- Resource Base – 20.7M oz’s Au; 700M oz’s Ag
- Measured & Indicated… 17M oz’s Au
- Inferred… 3.7m oz’s Au
- Plus 700M oz’s Ag
- (38M oz’s AuEq @ 40:1)
Target Market Cap… $15B - $20B
Perseus Mining PRU-T
Share Price… $4.04
Shares Out… 425M
Fully Diluted… 432M
Market Cap… $1.7 Billion
Q2 Production Highlights
N/A… First gold pour August 2011
Perseus has two high impact projects on the continent of Africa that put PRU on track to produce 460,000 ounces of gold per year by 2013. Perseus recently announced their first gold pour at their Central Ashanti Gold Project in South Africa which is expected to produce 200,000 ounces in the first 12 months and grow into a 280,000 producer the year after. The Tengrela Gold Project in the Ivory Coast is an early stage as far as explroation goes, but PRU is confident the ounces will voem later and is expected to come online in 2013 producing 180,000 ounces of gold. This makes PRU a very attractive mid-tier growth story in full production by 2013 producing close to 460,000 ounces of gold per year. The company has a resource base of 5.7M ounces M & I and an additional 2.2M Inferred between the 2 gold projects which include 3.93 in reserves. Cash cost for both projects are expected to be industry lows of around $500 per ounce for both projects. Perseus Mining will have the cost advantage of the intermediate African producers giving it a potential premium to PRU.
Notes…
- Both Tengrela and Ashanti Gold Projects have significant exploration potential, allowing for a material organic growth profile beyond 2013 after achieving a run rate of >400,000 oz’s per year.
- PRU has the potential to be for 750,000 – 1M ounce producer beyond 2015 but organic expansion will come largely through the drill bit.
- Cheaper than Semafo…Similar production profiles, similar resource, double the reserves, 50% more production by 2013 (460k vs. 300k), lower cash costs (~$500 vs. ~$635).
- Top African Pick
- Production
- 2012… 220,000 oz’s
- 2013… 460,000 oz’s
- 2014 run rate... 400,000 – 500,000 oz’s
- Reserves
- 3.9M Proven and Probable
- Cash Costs
- ~$500
- Resource Base – 7.9M oz’s
- Measured & Indicated… 5.7M oz’s Au
- Inferred… 2.2M oz’s Au
Target Market Cap… $5B - $7.5B
Alacer Gold Corp ASR-T
Share Price… $10.88
Shares Out… 281M
Fully Diluted… 295M
Market Cap… $3 Billion
Q2 Production Highlights
Production… 101,348 oz’s gold
Cash Costs… $649
Net income… $61.9M
EPS… $0.22; $0.88/year annualized
PE… 12
Alacer Gold is one of Australia’s largest primary listed gold producers. They have operations from 4 mines, 3 in Australia and their most recent start-up, Copler in Turkey whose 400,000 oz’s projected by 2015 will make up half the companies 800,000 production profile by 2015. The company currently has cash costs of ~$650 per ounce which is expected to be reduced even further to $590 by the end of 2011. Further reductions in cash costs are expected as $500 - $525 is projected for the life of the combined operations of ASR's projects. The Australia operations cash costs are expected at around $600 while Turkey operations can be expected to be well under $500 per oz on a by-product basis.
Alacer has an excellent internal growth profile through exploration potential of its current operating mines as well as excellent exploration potential form joint venture copper gold projects in turkey. ASR may also grow through acquisition with a very undervalued company like La Mancha Resources being a great fit as it would significantly add to the production profile from 800,000 oz’s in 2015 to almost 1.2M oz’s. La Mancha currently trades at a $350M market cap, has a gold copper profile similar to Alacer Gold and shares the Frog’s Leg Mine with ASR. LMA owns 51% and is the operator which would consolidate the area under Alacer’s control. A $350M investment to increase your production profile by almost 50% by 2015 and consolidate ownership and control of a key project with a profile similar mineral profile to Alacer seems like great synergies. Spend 10% of current market cap to incrase production 50%. Pretty much a no brainer to me.
Notes…
- Great combination metrics with La Mancha
- Cash costs expected to decrease as high impact projects come into full production
Alacer Gold Profile
- Production
- 2012… 530,000 oz’s
- 2103… 600,000 oz’s
- 2014… 625,000 oz’s
- 2015… 800,000 oz’s
- Reserves
- 5.5M oz’s
- Cash Costs
- Australia - $650
- Turkey - $430
- Resource Base – 15.4M oz’s Au
- Measured & Indicated… 10.6M oz’s
- Inferred… 4.8M oz’s
Target Market Cap… $12B - $15B
New Gold Inc NGD-T
Share Price… $13.37
Shares Out… 399M
Fully Diluted… 468M
Market Cap… $5.3 Billion
Q2 Production Highlights
Production… 95,039 oz’s Au
Cash Costs… $354
Net income… $79M
EPS… $0.19; $0.76 annualized
PE… 17.6
New Gold is the market darling in the gold industry with industry leading cash costs going into 2013 at around $60 per ounce on a by-product basis. NGD is currently producing at a rate of 380,000 ounces of gold and expects to increase production a further 25% in 2012 to 500,000 ounces of gold and further expected to increase to 600,000 ounces in 2013 where production will level off until their recent acquisition of the 4M ounce Blackwater comes into production closer to the end of the deceade. New Gold has a long term production target of 1 million ounces by 2017 of which Blackwater is a key asset in acheiving that milestone.
Current production comes from 3 mines including Peak Mines, Mesquite and Cerro San Pedro. Short term production drivers to 600,000 oz’s of gold include New Ashton (less than 12 months to production) and NGD’s 30% interest in Goldcorp’s El Morro. New Ashton represents an additional 85,000 ounces of gold and 75M lbs of copper to the production profile while, NGD’s interest in the massive El Morro project is expected to put New Gold up to the 600,000 ounce mark per year by 2013. Blackwater is NGD’s major production driver beyond which is expected to grow to a > 10M ounce resource and is a major part of NGD’s longer term plans for 1 million ounces by 2017.
Notes...
- Industry leading cash costs (premium)
- Internal Growth to 1M ounces
- Management demonstrated ability to make high value strategic acquisitions (Blackwater)
New Gold Profile
- Production
- 2012… 500,000 oz’s (New Ashton)
- 2013… 600,000 oz’s (El Morro)
- 2017… `1M ounce production (Blackwater)
- Reserves
- Proven & probable… 8.3M oz’s Au; 46.4M oz’s Ag; 2.8B lbs cu
- Cash Costs
- 2012… $230
- 2013… $60
- Resource Base – 17M oz’s Au; 132M oz’s A
- Measured & Indicated… 12.9M oz’s Au; 83M oz’s Ag; 3.5B lbs Cu
- Inferred… 4M oz’s Au; 48.5M oz’s Ag; 1.1B lbs Cu
Target Market Cap… $15 - $20 Billion
AuRico Gold AUQ-T
Share Price… $11.96
Shares Out… ~280M (post NGX merger)
Market Cap… $3.3B (post Northgate merger)
Q2 Production Highlights
Production… 118,871 ounces
Costs… $620 (consolidated)
Net income… ~$63 million (before extraordinary expenses)
EPS… $0.22; $0.88 annualized (consolidated)
PE… 13.6
Aurico Gold recently announced a business combination with Northgate Minerals to create one of the preeminent mid-tier miners in the sector. The the fact that this company will be producing 730,000 ounces of gold by 2013 with the potential to produce in excess of 1 million ounces once Young-Davidson is in full production makes Aurico Gold a mid-tier threat that you cannot ignore. In fact it is a top pick of the group with both favorable silver exposure and a massive half a million ounce per year project like Young Davidson. The market reacted quite badly to the business combination because on the surface it looks like Aurico is taking over a high cost producer in Northgate Minerals, but Northgate has arguably the best high impact project in Young Davidson expected to produce 500,000 oz’s of gold per year at cost of around $400 per ounce. Northgate has mines in Australia that operate at around a $900 per ounce cash cost, but other than those 180,000 ounces, any future ounces that Aurico and Northgate produce are expected at less than $500 per ounce.
The business combination is one that has great synergies as Aurico has all the current low cost production being able to help fund the massive Young –Davidson project interanally. This project will be the backbone of the company’s production one day. Northgate Minerals also triples Aurico’s gold resource from 4.5M oz’s to 13.1M ounces in all categories. Aurico has another 208M ounces of silver. Currently the company is producing 500,000 ounces with 180,000 being at $900 per ounce while the rest of the company’s production is expected at less than $500 per ounce of gold. AUQ once it has eaten through this transaction is another high impact intermediate producer with a long term growth profile of over 1 million ounces of gold.
Notes...
- Industry leading cash cost producer less Australian operations
- 1 million ounce production potential run rate
- Production
- 2012… 636,000 oz’s
- 2013… 730,000 oz’s
- 2015 - ?... 1M ounce potential
- Cash Costs
- 180,000 – 200,000 oz’s @ ~$900 / ounce
- Rest of production <$500 going forward
- Resource Base – 13.1 M oz’s Au; 208M oz’s Ag
- Measured & Indicated… 9.12M oz’s Au
- Inferred… 3.88M oz’s Au
- Reserves
- Proven and Probable… 5.1M oz’s
Target Market Cap… $10B - $15B
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