just ripped this off of an SH post
re:GOZ.V
note:
I have 29,000 shares ....
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Near-Term Production Story More Compelling Than Ever
By David J. DesLauriers
23 Aug 2006 at 04:34 PM
TORONTO (ResourceInvestor.com) -- In late April of this year, your correspondent published a well-followed story on Gold-Ore Resources [TSXv:GOZ], which at the time was trading at 49 cents. The stock, which at one point reached 75 cents, has come back down with the sluggish summer markets, closing today at 52 cents.
We said then that GOZ was “an excellent bet, and with shares changing hands at 50 cents, or essentially 1X cash flow, investors could well be rewarded with a 10 bagger over the coming year if Gold-Ore executes on its plan, and goes on to trade at the standard 10X cash flow multiple of its gold producing peers.”
The crux of this story is the cash flow - and Gold-Ore’s current low multiple. Since our piece was published, GOZ has made significant progress in its mine development program at the Bjorkdal mine in Sweden (which looks bigger than ever), and continues on track to begin production mid-2007.
Progress / Timeline
1/4 way through 8,000 metre drilling program - Expected completion in November
3/4 done on the almost 1 kilometre of tunnelling - Expected completion first week of October
2/3 done on 75,000 tonne bulk sample - Expected completion mid-October
1/3 done on estimated 10,000 total samples - Expected completion end of November
Engineering Studies - Expected to begin December
Resource Update & Results of Engineering Study – Q1 ‘07
A Growing Resource: An Even Better Story
In our last article, we said “The company is testing an area previously drilled by widely spaced holes, which is sufficiently large to host 500,000 to 1,000,000 ounces of gold.”
A couple of things have happened since then:
The company has looked at this again, and has concluded that there is no reason to doubt that the mineralization continues, and that the 500,000 to 1,000,000 ounces of gold which the company was targeting could actually be more like 2,000,000, to 4,000,000 million ounces. There is a logical argument to be made that the target area could easily be expanded in the direction of the tailings pond, and all indications are that the mineralization is consistent. Take this picture and cast the red net over the area that is not covered, and this could be a 20-year mine life, very interesting to mid-tiers, and to the way the company would be valued by the market.
The second thing is that Gold-Ore has uncovered some historical drilling results which indicate significant grades below the Gold-Ore tunnelling program. Mines in the area have operations at between 1 - 2 kilometres depth, and GOZ is currently only at around 200 metres depth in the open pit. Part of the drill results, which will be released in Q4, will include testing to depth where it is wide-open, and would appear to be high-grade.
Valuation / Conclusion
What remains true, as we stated in April (see link at beginning of article) is that “What investors who capitalize on this now are betting on is that: Management, who between them have discovered several million plus ounces mines in the past can expand the resource at Bjorkdal, a fully functioning mine currently in production in a safe part of the world which demonstrates a number of exciting new targets, and areas where grades are consistent, but definition drilling is warranted.”
But the story has improved since our last piece because it is believed that the size of the deposit at Bjorkdal could be much, much larger than previously thought. This is obviously still conjecture until tunnelling/drilling defines the area in detail, but geologically (and Gold-Ore Geos are first class) it makes perfect sense, and indications are that consistent mineralization continues in that direction.
In addition, the period between September and December of this year should be full of news flow as results come back from the drills and tunnelling.
Last, but not least, the company remains on track to produce between 75,000 - 100,000 ounces per annum starting in mid-2007, which equates to 50 cents per share of cash flow at the low end. That means that on the cash flow side, Gold-Ore remains a hidden gem which trades at 1X cash flow, and could well trade at 10X cash flow (the average among peers) a couple of quarters into production. This could be a $5 stock in 12-18 months time.
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here is the link to the SH poster:
stockhouse.ca
regards,
john |
