GOZ
inmaxwetrust.com
Unless you haven't guessed it already I have kind of a "thing" for small gold-mining companies that are just starting up operations. I guess it's no big secret that there's alot of value in this particular area these days. If you want to make money off stocks in this environment, it has to be precious metals, possibly energy, gems like Millicom or stocks that have completely crashed like GM (the stock actually did a nice 50% bounce after my post... good coincidence). Anyway, here's another nice looking junior gold-miner:
Quick numbers - mcap ~$24M (USD, not CDN), working capital $4.2M, no debt. By the looks so far, there appears to be about a 10% net profit margin from gold sold.
GOZ is currently only active in Sweden where they have three main projects. GOZ's only operation is the Bjorkdal-mine which has been running since 1988 and which has produced about 1M ounces.
Gold is mainly produced from open-pit, but an under-ground operation is starting up which will increase production from 28,000 to 50,000 ounces in 2009. Average cash cost per ounce is today slightly north of $500 - about $540, and is expected to slowly head lower. Open pit has avg. grades of 1.65-1.83g/t and inferred and indicated resource is about 160,000 ounces whereas underground has 4.72-5,65g/t and a total resource of 145,000 ounces; then there is a very low-grade stock-pile resource at 0.65g/t which holds ~40,000 ounces.
That pretty much guarantees an operation of four years. The bjorkdal-mine is open at depth and there are large unexplored or underexplored properties in the area, most notably the Ronnberget property just next to the mine, which has shown drill intersections of 6m with 180g/t. Interesting to note is that the bjorkdal-area has a small resource of tellurium (a metal more rare than platinum), and it is being reviewed if this should also be extracted along with the gold, however the price of tellurium is not particularly high, although one might think so considering its rarity. Tellurium sure is purty though!
The other project of GOZ is Norrliden, which is 90% owned by GOZ and 10% by IGE Nordic. This is a project that has seen exploration for almost 50 years and which today holds a fairly large resource (Ind+inf: ~2,400,000 tonnes) of gold (0.40-0.63g/t), silver(31-51g/t), zinc (1.87-3.54%), lead (0.19-0.36%) and copper (0.72-0.74%).
It is envisioned that ore will be mined from this location and transported to a nearby processing-plant owned by another company, thereby making it a very low-cost operation to start up.
So, if GOZ sells 50,000 ounces of gold in 2009, at todays price ($940), then they would make $47M, and if the above mentioned profit-margin stays about the same you would have $4,7M net profits.
That gives us a p/e of only 5.2! That's really good for a company that's actually growing. And as the cash-cost will go down, the margins will improve (if the price of gold stays up). Not only is GOZ making lots of money, they also have lots of gold in the ground along with very bright potentials. Even if gold wouldn't continue to rise, I'd say GOZ is a great stock to buy.
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