GOZ
The Jordan Fund
Gold-Ore Resources (GOZ.V) 0,96 CAD, 28 March 20
No of shares: 79.7m (fully diluted)
Market cap: 76.5m CAD
www.goldoreresources.com
Operations
Gold-Ore is a gold company that have managed the feat of catching one of Europes largest formerly producing projects – the Bjorkdal mine in Sweden – for virtually nothing. In the deal they also got a working mill and some heaps of scrap ore with low grade ore by the mine. The mill has a 3700 tpd capacity.
Current situation
In the last year they have used low grade ore in the mill for a positive cashflow + test of the equipment. In the mean time they have constructed tunnels, drilled and have gotten a picture of the ore in the rock and made a plan for test production from inside the tunnels.
Short term agenda
The company will soon release all its internal numbers on the projects economy. Judging by the latest press releases on drilling one can expect 5-6 g/t gold grade production and cash cost including tunnels and transportation of no more than 360 USD/oz.
As soon as the numbers are out we believe there are hungry analyst that will eagerly write about the company.
Mid-term
After a first test production run in April-August with small tonnage high-grade mining and test prior to the final feasibility study, it is time for 1500 tpd production, towards the end of the year, i.e. less than half the current mill capacity. In the beginning a mix of high and low grading ore, and then the low grade will be replaced with high grade until we end up in the beginning of next year with, when we believe they will be running at 75000 oz annually, if our grade assumptions are correct. A cash flow of 22m USD per year at an assumed 92% recovery rate.
Long term scenario
All of the Skellefteå trend from the Norweigian border in the west to the Bjorkdalgruvan in the east points to mineralisation to fine depth. It would not surprise if Gold-Ore’s deposit was a kilometer below the levels that they currently are working at. Also, ground samples indicate continued mineralization about a kilometer from the mine. Our guess is that if the mineralization continues at Bjorkdal, that GOZ will be able to show 2-4m oz of assets within a few years. Boosted assets could turn the company into a major gold producer.
With grades around 5 g/t and a capacity of 3700 tpd, simple mathematics show that Gold-Ore, in the future, could have the possibility of producing close to 200,000 oz per year.
Finances
The mill is already in place. So are the tunnels. A lot of equipment is rented and is therefor paid afterwards. The company gets some cash from the scrap ore that pays for most of the investment, but there is some payments left to Minmet on the acquisition of Bjorkdalsgruvan. We believe that the company will raise som cash in conjunction with a possible listing in Sweden later in the year!! This could bring a dilution of 15%.
Number crunching
At full throttle the company will have a mid-sized operation with not so large reserves but in a safe country. A P/CF of around 6 to begin with and growing after some strong quarterly reports and expanded reserves to maybe P/CF = 10.
This gives us the follow target prices
30 June 2007: 1.25 CAD
31 Dec 2007: 1.75 CAD
30 June 2008: 2.80 CAD
Our assessment
We believe that one should hold the stock in the short term, medium term and the long term…!
Precious Metals Portfolio
At todays prices and assuming the target prices for 2007 are met will have an average +110% to look forward to in the 7 issues below.
Jan Price % Target Price
Ticker 2007 Now 2007 2007 2006 2006
AUN.V 1.33 1.65 24% 3.00 0.77 73%
EXN.V 1.19 1.56 31% 2.10 0.37 222%
GOZ.V 0.77 0.77 0% 1.75 - -
PRO.V 0.70 0.78 11% 1.80 - -
RCT.V 1.96 2.79 42% 4.50 0.98 100%
SAM.V 0.60 0.98 63% 1.75 0.32 88%
TRGD.PK 1.32 1.20 -9% 3.00 0.36 267%
Avg 2007 27% Avg 2006 150%
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