Lundin says buy Keegan

2012-05-24 18:28 ET - In the News

Brien Lundin, in the May, 2012, edition of the Gold Newsletter, says buy Keegan Resources Inc., recently $2.52. Mr. Lundin said buy 11 times between November, 2005, and October, 2011, at prices ranging from $1.04 to $8.27. Assuming a $1,000 investment for each buy, the $11,000 position is now worth $9,868. Keegan owns the advanced-stage Esaase project in Ghana, which hosts five million ounces of gold. It plans to release a definitive feasibility study for the project by year-end. Mr. Lundin says the study will likely show better numbers than the already-impressive prefeasibility study released in September, 2011. The PFS calculates net present values that are highly sensitive to the price of gold. Assuming a gold price of $1,150 an ounce, the NPV is $171-million; at $1,800 an ounce, the NPV shoots up to $1.04-billion. The editor says Esaase could attract a takeover bid, which would be good for shareholders. However, even if no bidder comes forward, Keegan could bring Esaase to production by itself, because it has nearly $200-million in cash. Mr. Lundin likes the company's tight share structure, with only 75.5 million shares outstanding. Buy the ideal and near-perfect Keegan at the currently depressed prices.