TD Waterhouse (TD Newcrest) issued a three page report on SGR this morning. They are raising the 12-monht target from $4.00 to $5.00, and maintaining their BUY recommendation.

Here are a few excerpts from the copyrighted report:

"Subsequent to the initial resource estimate for the 007 Zone in March, San Gold has released what we view as exceptional drill results. Recent results were highlighted by CD-10-066 which cut 95 g/t over 2.1m at 61m below surface and CD-10-020 which cut 51 g/t over 2.7m at a depth of 335m below surface."

"The company reported that drilling has now defined a continuous, high grade deposit from surface to 450m depth, which implies a substantial expansion of the March resource envelope of only 150m or so vertically. We believe the company may be in position to quantify this potential expansion with an updated resource estimate by year-end."

"We believe that companies such as San Gold that in our view benefit from having steep production growth curves and strong exploration momentum should command premium multiples. An important point of difference with peers that we would highlight is San Gold’s record of rapidly advancing near surface discoveries to production. We note that the 007 zone was discovered in November 2009 and that initial ore development and bulk sampling is expected to begin this quarter."

"We expect the company to report Q2/10 results in mid-August."

"Outlook: We have adjusted our estimates to reflect operating and financial results year-to-date. Overall, we continue to foresee a number of positive catalysts for San Gold over our target price horizon, driven primarily by ongoing exploration results and the completion of near-term development objectives. Currently, we understand the company has ten drill rigs employed with results expected on an ongoing basis."

TD's latest production estimates are:
- 2010: 79,954 os (TD's previous estimate was 85,933 oz)
- 2011: 137,329 oz (unchanged)
- 2012: 173,995 oz (unchanged)