Gold Production in Mexico
Targeting 2013 annual production of 118,000 ounces of gold
Message: Cannacord Morning Coffee (4/16/10)
Timmins Gold* (TMM : TSX-V : $1.53), Net Change: 0.12, % Change: 8.51%, Volume: 772,431
For those who come to San Francisco, be sure to wear some flowers in your hair. Timmins Gold outperformed yesterday on above average volume. Last week, the company announced that it had achieved commercial production at its 100%-owned San Francisco gold mine in Mexico. The company also reiterated its 2010 guidance for production of 80,000 ounces of gold. With commercial production achieved, the company should report its first quarter of production and costs in calendar Q2/10. What investors are waiting for now is a resource update for the San Francisco project. The update is expected this quarter. This should be a key catalyst for Timmins given the relatively short 4.5-year mine life of the San Francisco mine. Canaccord Adams Mining Analyst Nicholas Campbell expects to see a revaluation in Timmon shares as investors recognize the company as a new junior gold producer in Mexico. Timmons trades at 4.3x 2011E CFPS vs. the 12.3x 2011E CFPS junior average. It is also trading at 0.88x P/NAV (5%, spot) vs. the 1.24x junior average. Given the discounted valuation relative to other junior producers, Campbell sees Timmins as a potential acquisition target for a junior producer operating in Mexico that is looking to diversify its production base and increase its production profile. Potential suitors would include Alamos (AGI), Gammon (GAM), Minefinders (MFL), New Gold (NG) and Argonaut Gold (AR).
4 Recommendations
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