Taken from a post by MrC on Aurcana thread, stockhouse..
Shafter Starting To Hit Its Stride: Commercial Production Declared
On December 14, Aurcana announced commercial production at its Shafter Mine located in Texas.
Highlights include:
• Aurcana announced that the commissioning and testing phase at Shafter has been successfully completed and the mine is now in commercial production;
• The plant is current operating at 600 stpd with ramp up continuing towards the targeted 1,500 stpd. Additional miners have been hired and will begin work in January;
• Additional thickener tanks are expected to be installed in Q1/13 and upgraded filters are expected to be installed in Q2/13;
• Processing of the lower grade open pit ore has stopped. Ore is being sourced exclusively from underground where grades are 2x to 3x those of the pit;
• Aurcana also announced that La Negra is expected to ramp up to 3,000 tpd by the end of Q1/13. We continue to conservatively model maximum throughput of 2,500 tpd at La Negra; and
• With commercial production achieved at Shafter, the next major catalysts on the horizon for Aurcana are a successful ramp up to 1,500 stpd production at Shafter, 3,000 tpd at La Negra and initial production/cost results from Shafter.
Valuation
We continue to value Aurcana using a 67/33 blend of P/NAV multiples and 12-month forward looking CFPS multiples. Our CFPS-based target is $1.50, while our NAV-based target is $1.50, resulting in a blended target of $1.50. Aurcana is trading at 6.6x our 2013 CFPS estimate compared to its junior peers at 6.2x and its intermediate peers at 8.8x.
Conclusion
With commercial production achieved at Shafter, we are now looking for a successful ramp up to the planned production capacity of 1,500 stpd and initial production/cost data as the next major milestones for Aurcana. We are maintaining our Outperform rating and $1.50 price target.
stonecapsecurities.com |
