more from same site WGI:
January 30, 2007
Another junior goldminer candidate, Tues., Jan. 30, 2007, 3:25 PM
Today we celebrated Scotland's favorite son, Robbie Burns, with a dish of beef stew, shortbread and haggis. Ray Threlkeld of Western Goldfields provided the lunch and the entertainment.
Entitled "Introducing a Unique Investment Opportunity," Threlkeld went through the usual presentation. My conclusion: what's not to like.
Here are the bullet points:
* Projected 9.5 years annual production of 165,000 oz. gold, starting (full prod.) April 2008
* Cost of sales of $335/oz
* All-in costs of $414/oz
* After-tax IRR est. to be +13 pct @$500 gold; +25 pct @600 gold; and +35 pct @$700 gold.
* Fully funded, fully permitted, and situated in Southern California with a grandfathered environmental permit and an environmental partner in Los Angeles County that needs their fill to cover disposed waste
* World-class resource with completed resource estimate of 3.61 million oz gold and a completed feasibility study for mining 2.36 million oz gold reserves.
* Additional resources are likely with drill results to be reported in February
* Conventional truck and shovel mining with run-of-mine heap leaching
* Politically stable environment " about 120 miles east of San Diego CA and 45 miles northwest of Yuma AZ.
* Outstanding management team that will likely build a success here with this property and use the shares to acquire similar properties for the next several years
* Completed a C$70 million financing a couple days ago, done overnight
* Arranged a C$105 million project debt financing in Nov-06
* Low $286 million market cap capable of expanding by a factor of three after the expected analyst rating upgrades
* Property called Mesquite was acquired from Newmont for 3.5 million WGI shares (ie, less than 10 pct) plus Net Smelter Return of between 0.5 pct and 2.0 pct. Newmont holds additional warrants to purchase 6.1 million shares
Why do you buy the shares of a goldminer? As Threlkeld says, it's because of (i) the resource (ii) management, and (iii) the price of gold. This one is a winner on all counts. I don't think WGI.TO will be trading at a low price for long.
The resource has already produced about 4 million oz of gold at an average cost of sales of less than $200, but was suspended by Newmont in 2001 due to low gold prices. But Newmont acquired expansion permits and grandfathered the mining rights before selling the resource. Another management team failed to do much, and present management stepped in recently (less than a year ago) with financing and a solid track record of success in the gold mining business. This is basically an old mine with a new story. I happen to like the story.
Chairman is Randall Oliphant who until 2003 was CEO of Barrick. CEO Threlkeld was formerly a senior officer at Barrick. Paul Semple and Wes Hanson have a track record of success in the industry, and CFO Brian Penny formerly held that position at Kinross.
Gold prices at this level will generate a substantial profit.
The stock trades on the Toronto Exchange (WGI) ($2.35) and in the USOTC market (WGDF) (US$1.96). I would expect a full U.S. exchange listing soon.
Until I get a better feel for the company, I will set a 12-month Price Target (PT) of C$4.00 (US$3.50). Should gold prices move higher, I will not hesitate to set a higher PT. This one is worthy of looking into. I will follow it closely here in the blog. |
