LSG... yes not exactly stellar results.... My average cost is 1.44 as I picked up a very large amount at 1.31 and 1.38..... My strategy was a play on better results than this so I'll probably start downsizing into any future strength.... Longer term still looks may be a pretty good bet on a turnaround but I own way too many shares right now
Lake Shore Gold Corp. | Wendell Zerb, P. Geol, 1.604.643.7485
LSG : TSX : C$1.71 | C$684.0M | Hold , Target C$2.15 ?
•Weak Q3/11; outlook, lighter shade of grey; maintaining HOLD and increasing
target to C$2.15 (from C$2.00)
Investment recommendation
We are maintaining our HOLD rating, and increasing our 12-month target on LSG
to C$2.15 (from C$2.00) based on near-term resource growth and exploration
upside. Given current operating challenges and longer-term expansion plans, we
believe an improved operational outlook remains at least 9-12 months away.
Investment highlights
• LSG’s reported loss in Q3/11 was -$5.2 million or -$0.01 per share, while
operating cash flow was $9.1 million or $0.02 per share, in line with our
estimate. The results were based on pre-released sales of 16,570 oz Au, and
production of 18,833 oz Au at cash operating costs of US$884/oz.
• We maintain our cautious view on LSG in view of the operational difficulties
encountered at Timmins. A longer-term operational turn-around will likely be
based on upcoming resource estimates and scoping studies for the Thunder
Creek and Bell Creek mines to better define plans to feed an expanded 3,000
tpd mill by 2013.
• LSG has a cash and equivalent balance of C$47.6 million, plus US$30 million
in undrawn credit from a revolving credit facility, which combined with
production cash flow appears at present to be sufficient to fund mill expansion
and underground development plans into late 2012. Capital expenditure and
production plans for 2012 are still being defined by the company.
Valuation
Our 12-month target of C$2.15 (from C$2.00) is based on a 0.75x multiple
on our revised NAV (5%) of C$1,129 million, using our peak Au scenario of
US$1,750 per ounce. |
