San Gold Seeks Consistency – CIBC

Wednesday November 20, 2013 9:16 AM

Canadian bank CIBC says San Gold Corp. (TSX: SGR) is looking for consistency after taking a step backwards with its third-quarter results, highlighted by lower than expected gold grade. “Reviewing the operating performance of the Rice Lake Mining Complex over time, we believe the operation has yet to achieve a sufficient level of consistency,” CIBC says. “While 2013 gold production guidance of 75,000 to 85,000 ounces was maintained, operating cost guidance was increased to $900 to $950 an ounce (previously $800 to $900 an ounce).” CIBC noted they are disappointed with the uptick in costs given the company’s focus on managing costs and achieving free cash flow. CIBC also says “the company’s cash balance is relatively tight and has required funding from external sources (proceeds from shares, warrants, debt) from time to time, reminding us that operations remain a work in progress with respect to free cash flow generation.” However, on a positive note, CIBC says it’s good news the company managed to lower its capital spend by $8.7 million quarter-on-quarter.

By Alex Létourneau of Kitco News; aletourneau@kitco.com