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Message: TDW Report on SGR

TDW Report on SGR

posted on Mar 30, 2010 12:34PM

TD Waterhouse released a report on SGR this morning. The report is relatively positive in nature, but they are dropping their target price from $4.50 to $4.00. They are maintaining their BUY recommendation.

The report is copyrighted but here are some excerpts:

"Operating and financial results were below our expectations, but with the company still in the early stages of commercial production and exploration and development work ongoing, we do not view the quarter as particularly meaningful.
We have adjusted our estimates to reflect revised guidance for 2010-12 detailed in the most recent company presentation (dated February 2010). Overall, we now expect a more gradual ramp-up in production over this period, but note that our estimates do not reflect the potential upside development opportunities associated with the L-13 and Cohiba zones. As a result, our NAV5% declines to $2.66/share (from $2.90) and our 12-month target decreases to $4.00/share (from $4.50). We maintain our BUY recommendation."

"On a pro-forma basis, we estimate San Gold holds a cash balance of $40 million, which is sufficient, in our view, to fund the company’s current exploration and development plans."

"Outlook: We continue to foresee a number of positive catalysts for San Gold over our target price horizon, but our outlook is tempered by our expectations for a more gradual ramp-up in production. As a result, we expect exploration results will continue to serve as the primary catalysts for the stock in the near-term. Currently, the company has ten drill rigs employed with results expected on an ongoing basis."

TDW's production estimates are as follows:
-- 2010: 85,933 oz.
-- 2011: 137,329 oz.
-- 2012: 173,995 oz.

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