Retirefund is for sale!

Friday, April 8, 2011

San Gold predicts 84% increase in output in 2011

San Gold Corp
www.SanGold.ca
TSX: SGR || OTCQX: SGRCF 

Right: SanGold Rice Lake Mine.

Over the past year, the Share price of mid tier gold producer, SanGold, has gone from $5 to $2.52

That selloff was, in my humble opinion, way over done, and San Gold is primed to out perform in 2011 and beyond. In the past week alone, the company announced its production of gold is up significantly in Q1 and it has a new, rich discovery at the 007 property. Production has increased at their Rice Lake mine beyond the capacity of their mill, with an abundance of ore waiting to be processed.

This is not a small prospector, but a mid tier, producing gold miner, with two producing mines and processing capacity which has to be increased this year just to keep up with its own production of gold. To this point, management has been tilted toward an overwhelming technical and production expertise, while not taking advantage of marketing to best advantage.  I believe this will change as new management takes the reins which has already begun.

Sangold highlights:

  • Two mines in production - Rice Lake and The Hinge. The Hinge went into production within two years of discovery.
  • The 007 zone has started bulk sampling.
  • Mill production approaching capacity as new ore development comes online.

Consistent growth and market appreciation since 2005.
  • Revenues tripled from 2008 to 2009 -- from $8.7M to $27.8M.
  • On track to double revenues again this year.(2011)

Potential 

Aggressive Gold Exploration Drilling in 2011

  • Multiple high-grade gold discoveries
  • Seven new gold discoveries over the past two years at The Hinge, 007, 007 East, Cohiba, L-10, L-13 and Emperor.
  • High-grade potential throughout the region.
      • Drilling continues to move the geological model from discrete zones to an interconnected system of veins.

San Gold is forcasting gold production, which was 43,498 ounces last year, to rise nearly 100% to 80,000 ounces at cash costs of $650 per ounce by year end (2011)  These, my friends, are great numbers.

Production is way up in Q1, expected to double in 2011, share price is near 52 week lows, gold prices are climbing, new veins have been recently discovered at 007 and insiders are buying on the open market. So am I!

During the first week of April, I bought into San Gold at 2.52, 2.63 and 2.68.  I think the share price will double (at least) over the next 12 months and maybe even hit $7-8 per share. Today gold was trading $30 below the $1500 mark, and rising.

If you do not have gold, or solid gold mining stocks in your portfolio, you should consider it as insurance against inflation as fiat currencies like the usd continue to dive. In fact, if gold even reaches its average price ratio in comparison to these currencies in todays dollars, it should be at $3,000  not $1500.

This ride is far from over!

All the best with your Retirefund.

HP


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4 comments:

David said...

another good stock pick again HP.

I do have a Q on your other pick though. Talison Lithium i recall you predicting a share price of $13.20 by springtime. I know that seems to be far fetched now that we're already in early april, but what's your view on where things stand for it? I hope it'll reach $13.2 even if it takes a little longer in timeline. Has your view changed? Can we now instead expect a more steady slower climb now for Talison Lithium? I'm hoping for a $20 SP by 2013.

H. Pelham said...

I looked at San Gold as a value buy after watching it drop 50% in the past year at a time when gold prices climbed and the compamy actually began producing more gold and discovering more, but wern't getting out their message.

After doubling on it's first day of trading, then doubling again in 12 weeks, I may have expected too much too soon with Talison. I am still long TLH and expect that target may not be reached for another year. I do expect a steady, slower climb for TLH.

David said...

Thx for the feedback. I think i'll likely stick with it as it requires patience like a growth stock does.

In any case, today's lawsuit announced among shareholders of Canada Lithium Corp. today may potentially graw investors from CLQ to other companies like TLH. What you think? Knowing Investors of CLQ are among one of the most traded on the TSX exchange. Can we expect some to jump ship and join TLH bandwagon? I hope.

H. Pelham said...

Lawsuits are a cost of doing business. I cannot see the CLQ problem being positive for others in the industry, although it could.