<<<Not too impressed with their target or half-hearted valuation >>>
Nor was I, Sultan, as I came across multiple mistakes / miscalculations in RBS' report....
The following was posted last night by mattbigham at the Aurcana board at SH and serves to illustrate some
of the discrepancies...
RBC
by mattbigham2
12/19/2012 8:57:09 PM
I read through their report. They aren't lying. They just provide some cautionary and innacurate information.
What they have done is provide a very extensive report and I find it interesting as it is a newcomer that is looking at the company for the first time. This provides some fresh insight and perspectives we never get from company speak, especially the Lenic speak that became both innacurate and annoying in the last year.
However, some of their crucial points are a quarter and even two quarters behind the company's latest NR growth projections and specifics.
RBC are quoting:
Silver production expected to increase significantly with Shafter ramp-up. With the start-up of Shafter, we expect annual silver production to increase significantly over the next few years with production forecast to increase to 6 million ounces in 2015E from 1.5 million ounces forecast in2012E . With operations at Shafter expected to reach steady-state levels in Q4/2013, Aurcana is on the verge of becoming a Tier II silver producer (production in excess of 5 million ounces) joining the ranks of First Majestic Silver, Silvercorp and Silver Standard. As a Tier II silver producer, Aurcana is likely to garner additional investor and capital markets attention.
MB: Their presentation has quite a few mistakes that I see and this analysis is silver only. LaNegra and Shafter should be producing 3.5 million oz + silver in Q1,2013 and that is conservative. Also,they will be near 6 million oz Ag Eq and the investing world acknowledges that fact. 3,000 tpd at LN/3.7 million oz eq and 750-800 tpd at Shafter for 1.9-2.1 million oz pure silver. AUN will be in the 4.0 million oz pure silver range in Q1,2013 and clearly a mid-tier in Ag Eq terms and specifically near term expectations of pure silver production, alone.
RBC: Reserve/resource replenishment risk: As both Shafter and La Negra have minimal mine lives based on current reserves, it is imperative, in our view, that Aurcana be successful in replenishing mined reserves and resources. As our valuation assumes future resource conversion and growth at both La Negra and Shafter, the inability to replace reserves and resources would have a negative impact on the company’s valuation.
Yet, on page 16 RBC writes:
Given the recent and significant resource upgrade, we expect La Negra could be in production for another 20 years assuming a daily capacity of 3,000 tonnes.
MB: I don't get it. The LN 43-101 just issued states 200 million oz Ag Eq with a new revised estimate done on the NW trend to be released in Q2, 2013. Additionally, AUN have bought up vast tracts of land surrounding La Negra. This is a 250 million oz Ag Eq deposit at a MINIMUM and yet RBC only states 20 years mine life @ 3,000 tpd. I get 40 years at 6,000 tpd. We also read the 'minimal mine life at La Negra' quote listed above, as well.It is confusing and incorrect.
RBC: After visiting Shafter a couple of months ago and speaking with Aurcana’s senior operating management team, we believe the ramp-up of Shafter is likely to take longer than anticipated by the market. Based on our conversations, we don’t expect Shafter to reach steady-state throughput of 1,500 tons/day until Q4/2013 given the need for additional equipment:
Q1/2013: Mill expected to operate around 600 ton/day.
Q2/2013: Mill expected to operate at 800 ton/day with installation of additional thickeners.
Q3/2013: Mill expected to operate at 1,000 ton/day with installation of additional filter presses.
Q4/2013: Mill expected to operate at 1,500 ton/day with installation of a second ball mill.
Based on the expected ramp-up of the mill and underground in 2013, full production from Shafter is not expected to occur in 2014.
MB: This is not accurate or AUN is listing innacurate information. Given the RBC 'mine life at LN' scenario above, I am going with the company's latest.
Q4,2012:AUN state 6-700 tpd a month ago,consistent,minimum 600 tpd now.
Q1,2013:800tpd as thickeners are added EARLY Q1,2013 as the AUN NR last week stated:
As part of the ramp up plan, the installation of additional thickener tanks, increasing the processing capacity of the plant, will be commissioned EARLY Q1, 2013.
Q2,2013:1,000 tpd-1,250 tpd as the additional filter presses are installed,again courtesy of the NR just last week:
In addition, upgraded filters will be installed in Q2 2013.
Q3,2013 1,000 tpd-1,500 tpd-Infrastructure has been fully updated/completed in Q2 and all that remains is a ramp up of mining and production. As AUN will have been in some operation capacity at Shafter for a full year by this point in time we can expect full 1,500 tpd production as soon as end Q2 or as late as Q3,2013.
RBC give the company no credit for the 2,500 tpd scenario AUN has laid out and the infrastructure they have paid for and put in place for that expectation and company objective.
http://www.stockhouse.com/bullboards/messagedetail.aspx?p=0&m=31934517&l=0&r=0&s=AUN&t=LIST
Dan  |
