BISSETT, MB, April 27 /CNW/ - George Pirie, President and CEO of San Gold Corporation (TSX: SGR) (OTCQX: SGRCF) is pleased to report that crushing plant upgrades have been completed and that test milling has shown a large increase in production capacity for Rice Lake Project mill operations. The first full week of operations using the improved crushing circuit (April 15 to April 21) realized an average of 1,513 tons per day processed, including an all-time daily record of 1,679 tons. Recovery rates were maintained at 94% during this period.
"These capital improvements were completed ahead of schedule and have increased our mill's capacity beyond design specifications," said Mr. Pirie.
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)
If you owned 18 valuable properties consisting of gold, silver, copper, lithium and rare earths, in various locations in North America, South America and Europe, you might have a problem explaining to shareholders and potentioal shareholders, just how much value is stored up in those properties. Frustration could set in for both you, and your shareholders.
That is the position TNR Gold (TNR-v) finds itself at this writing. Management has spent the past few years acquiring some very promising properties, and is now struggling to release the value inherant in owning a fairly large number of various resource discoveries under only one banner.
Image by dsearls via Flickr
We have discussed the development of Rodinia Lithium in past posts, and in the interests of full disclosure, we have a long position in Rodinia (TSX V:RM).
During this "second leg" of the lithium bull market, it seems timely to remind readers about Rodinia and it's developing deposits in both Clayton Valley, Nevada and it's other excellent properties in Argentina, all of which show huge deposits, and potential, and three of which are in the top 25 properties worldwide.
I have been high on Apollo Gold since I first bought the stock at .45 several months ago, and have been doing homework ever since. Earlier this month, I sold some APG at .51 to finance the purchase of more Wilan Technologies. I believe that these two companies have enormous upside potential in the short to medium term. That is why I bought more Wilan and bought back into Apollo Gold last week.
Apollo Gold is set to release it's latest core results from it's Grey Fox site near Timmons Ontario. This site is now tied into their already producing "Black Fox Mine" which will produce around 100,000 oz in 2010. Apollo also bought the Pike River property which connects Grey Fox and Black Fox and which has a rich history in itself.
gold analysts currently have Apollo Gold as a strong buy and I couldn't agree more. It is still trading in the .45 range per share (for now). Those analysts, and this writer believe it is better priced in the short to medium term somewhere between $2 and $3.50 and I believe this may even be too conservative.
Because of it's current production at Black Fox, and it's great core drill results at Grey Fox coupled with it's acquisition of Pike River, we believe it is a world class deposit in the infancy stage. Once the bigger dogs in the gold business get more familiar with the numbers and drill results, we think Apollo will be a takeover target in 2010. In that case, all bets are off and the target price goes straight up.
One note of caution is that Apollo hedged 30% of it's production at $867 per oz, in early 2009, however, this will not keep shoppers at bay nor should it keep you from making some money on Apollo Gold.
J. Taylor - The Au Report - "Apollo Gold has enormous upside potential and has one of the highest potentials for capital appreciation relative to risk involved.We think this company's Black Fox Mine, from which management expects to produce more than 100,000 ounces this year, represents the beginning of a world-class gold mining operation in the making. We say that on the basis of upside exploration potential not only on the producing Black Fox Mine but also on the basis of drill results from the Grey Fox and historical data from the Pike River Property, which Apollo recently acquired from Newmont.With Apollo currently trading at only 42% of NAV, enormous growth in earnings and cash flow starting to take place, enormous upside potential with regards to resource/reserve base and attributable production, Apollo is a perfect takeover target"!
Updated Dec 18th 2009 -The price of Gold is going up again, even though the talking heads (cnbc etc) are starting to tell us that King dollar is coming back. They must be only looking at their 3 month charts because they couldn't be more wrong about the dollar or about Gold (or other commodities for that matter) and here is why!
The elephant in the room is this: America is over $12 Trillion in debt and climbing. Check out the U.S. Debt Clock! If America does nothing to stop the bleeding, it will be $23 Trillion in Debt by the year 2020, more than 100% of GDP (that's only 10 years out). Now consider these 800 pound gorillas in the room trying to make space around the elephant:
1. The U.S. Fed is still propping up markets, and making massive asset purchases like mortgage backed securities while fully 25% of mortgages are underwater, and that number will increase through 2011 by all projections.
2. There are 2.4 $Trillion in ALT-A (Liar) Loans and sub-prime mortgages still out there and most don't reset until 2010 through 2015. If the Fed was not propping up this market including Fannie Mae and Freddie Mac, it would start another stampede for the exits. If they continue, then add that $2.4 Trillion to the debt numbers above. If they don't, just watch as millions more lose their homes.
3. As commercial real estate companies loans come due this year, they will run into a wall of re-financing problems as their lenders won't want to extend more credit, or will demand more security, or both. Only the strong will survive.
4. The banking industry expects up to 1,000 bank failures in 2010, because of the mortgage fiasco. Not last year, next year!
5. Many big financial institutions (remember all those who were "too big to fail") are still virtually ignoring the massive derivative debt on their books as they pay back those Government loans. (Yes, they leave them off of their books as if they didn't exist at all) They will have to be accounted for at some point. As that reckoning occurs, this problem all by itself will cause the dollar to drop.
6. The USA is still fighting two wars, on three fronts, after the President who launched both of those wars did not raise taxes to pay for them but, on the contrary, made two massive tax cuts in the middle of those two wars, something no other U.S. President had ever done throughout it's history.
7. The new health care bill will cost at least $1 Trillion dollars over 10 years.
8. Americans pay about 25% of the cost of Gasoline that the rest of the world pays.
9. The price of Gold is denominated in U.S. dollars.
The above really only addresses the American market, but the world of business has grown much larger. India and China are increasing their Gold reserves by huge amounts as they no longer trust the value of their U.S. dollar reserves. Brazil and Russia are doing the same. Russia has even added Canadian dollars to their reserves as the world tries to diversify around a falling U.S. buck.
These rising powers are also buying up commodities, oil, gas and mining companies. China has told all of it's 1.3 Billion citizens to also buy gold for their savings. India used to be the largest retail gold market (for it's dowry practices etc) but now China has taken over the number 1 spot.
Some market bulls believe Gold will top out somewhere between $2,000 and $5,000.
An inflation monster is coming and most of all the gold in the world is already above ground. That makes producing gold miners, expecially the juniors, takeover targets for the big dogs.
In our previous article : The argument for Gold, we first updated you on Gold's value in this market, and the hidden gem that is Apollo Gold, and it's Black Fox and Grey Fox Mines near Timmons Ontario. The story just got a little more interesting today!
Apollo Gold announced today, the assay results of 7 holes (out of 29 drilled) during it's drilling program in August at it's Grey Fox site and those results are excellent! We are still awaiting the results of the other 21 holes which should be released near the end of October.
This reinforces my reasoning for increasing my holdings through Sept and Oct and I believe there is more good news to come. Gold Analysts from The Gold Report had this company at a strong buy before the drilling at "Grey Fox" even began, with a minimum target price between $1 and $2.79 (it is currently trading at .58) Those estimates were solely based on Apollo's new production at it's "Black Fox" Mine (approx 40,000 oz) since June and did not even consider the drilling at Grey Fox nor Apollo's recent acquisition of the 3.5 km "Pike River" property which straddles these two diamonds in the rough since it started drilling core at Grey Fox.
I expect those estimates to be greatly revised upwards over the next few months and into the 2010 Q1 reports. Here are those initial Assay results from Apollo Gold.
PS: I would like to address a comment about gold investments by the venerable oracle of Omaha, Warren Buffett who said: " Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their heads"
Gold has, in fact, great utility! Gold is the best conductor of electricity on the planet. If it were not for the high price (and high utility value) every household would have gold electrical wires instead of copper. Every electrician out there knows this simple fact.
Gold is used in Medicine, Dentistry, Industry, aeronautics, space flight, electronics, computers and food production not to mention the massive international jewelry trade and as a hedge against devaluing currencies.
Currently, The Chinese Government is buying gold, and telling it's citizens to do the same. The Hong Kong government is actually in the process of moving it's gold reserves from London Banks, to it's own territory. In places as far flung as Istanbul Turkey, and Indonesia, people are buying up gold as a store of value against what the world perceives as a quickly weakening U.S. dollar. Gold has a 6,000-year history of preserving value against fiat currencies like the greenback.
Having regard to the above, I believe that, 2,000 oz gold is the "low end" of what is coming in 2010 and I believe that Apollo Gold is severely undervalued.
Update Oct 23rd - Apollo Gold signed an agreement with Elkhorn minerals to sell it's interest in the Montana Tunnels for $9 Million. This is another clear indication that Apollo Gold is clearing it's slate to concentrate on it's Grey Fox and Black Fox properties near Timmons Ontario which may be the largest pure gold discovery in the past 30 years.
Analyst Reports on Apollo Gold:(Which don't include the Grey Fox Drill Results)
1. . . .We continue to recommend the shares of Apollo Gold Corp. with a SECTOR OUTPERFORM rating." -KERRY SMITH, HAYWOOD SECURITIES (10/16/09)
2. "We have left our assumptions for 2010 unchanged, resulting in no effect on our $1.00 target price and SECTOR OUTPERFORM rating" for Apollo Gold.
--TARA HASSAN, M PARTNERS (09/30/09)
3..."Apollo Gold is very much a strong buy, an aggressive buy".
I am not a gold bug. I am a realist, but even at $1000 per ounce, gold may be a good investment right now for several reasons. Here are some of them:
The banks have had a great run this summer. After coming back almost 100% since it's lows in March, I have sold some of my TD Stock. (Yes it is still a good stock, but at 100% return, it's time to take some profit, no matter what stock you are in) I have also solidified some other gains, but continue to hold on to some small tech firms with huge upside potential such as Wilan Technologies and Ballard Power .
I don't believe the United States is anywhere near being "out of the woods" in it's recovery. A year after the crash, Wall Street is up to it's old tricks . There is a very good chance of an even larger correction in 2010 than we saw in 2008. No one really knows of course, but all the warning signs are in place. The bounce in the markets has been spurred by massive Government interventions, to the point where the most important man on Wall Street is Barrack Obama.
Many U.S. banks are still in serious trouble and hundreds more will fail over the next year. Institutions like Fannie Mae, Freddie Mac, AIG, etc, will "never" recover!!! The smartest guys in the room (Goldman Sachs, J.P. Morgan etc) as always, have come out on top, but even they have an uphill battle as the USD battles runaway liquidity while they still have to value those "toxic Derivatives" that haven't gone away. Wall Street bankers are now trying to do to our life insurance policies, what they did to our mortgages. They are still trading in over the counter derivatives with no transparency, and are paying huge bonuses to executives (sound familiar).
The commercial real estate market is facing a real crisis of re-financing. It could actually cause the next crisis. The domestic real estate market is sliding again and will until at least 2011. Creditors like China are searching for other stores of value, outside of the U.S. dollar. Besides commodities, China is investing in gold and actually telling it's citizens to do the same. Several large U.S. hedge funds are also investing in gold and finally, the Hong Kong government is currently in the process of moving their gold reserves to a domestic site from London. Now, if there is another crisis caused by the paper creating Vultures of Wall Street , do you really think the American public will allow their administration to launch even more expensive bailouts? Neither do I. That is why many investors are turning to a standard of value that reaches back thousands of years.
Gold investors know full well that, most of the worlds gold supply is already above ground. That is why major firms often go back to old, proven, gold fields with new technology to find and extract what remains. Let's face it, the days of individuals panning for gold in a river bed are long gone, but that doesn't mean exploration stops. It merely changes.
While contemplating which gold investments to make, I have been following this story with keen interest. A small American gold company, Apollo Gold (TSX: APG) (NYSE - Amex: AGT) of Denver Colorado, started producing gold at it's Timmons, Ontario site called "Black Fox" earlier this year. Since May when it produced it's first ounces of gold from that mine, it has been on the radar of a number of gold speculators and has been rated a strong buy because of that production, which has reached over 32,000 ounces in four months. Many feel it is very much undervalued and currently under the radar.
What has gold bugs truly salivating is a recent drill result that, at least in one new hole, in it's "Grey Fox" site (approx 30 km away) indicated a result of 455 g of gold per ton of ore. Now, in an industry where 3-5 "grams" of gold per ton is considered worthwhile, well.... you can fill in the blanks. Since then they conducted more drilling in August at Grey Fox, which have not been officially released yet, but oddly, two weeks ago, Apollo bought up the mineral rights to the entire stretch of land between Black Fox and Grey Fox giving them access to the entire fault line where, in prior years, there was a very productive gold mine.
One of the previous occupants of these claims, Cameco, sold off it's gold interests to concentrate on Uranium (which it now dominates) In one of it's last reports on this area, it's geologists mentioned that they believed a deeper drill may result in a greater find. Apparently, that's exactly what Apollo Gold has done, with a stunning result! I've noticed the share price go from .30 cents to .45 cents in the past 10 days, as they raised another $10 Million through private placement, and no drill results have been officially released yet. I couldn't resist, so I bought in at .45
12 month Analysis estimates (see below) are $2.76 based solely on the Black Fox production. However, the Grey Fox strike has caused an even bigger stir but we won't know the full story until the most recent results are released in late October 2009. I know this part of the equation is speculation but, sometimes, you have to read the tea leaves as best you can then, take the plunge. I believe that, at this price, I am well protected with at least a 250% upside built in. As the rest of the world invests in gold in the traditional sense (bullion, bars, coins etc) or in the large companies which are already producing large quantities from their mines (Rio Tinto, Barrick, Hemlo etc) I think Apollo Gold might be a home run, maybe even a grand slam. One word of caution: Apollo has it's gold hedged at $876, however it's production cost is $400 and dropping.
The last time I made such an investment,( nine years ago) it was in Novagold at $1 share. It went to $18 At that time, gold was just over $300 per ounce. Many analysts are predicting gold in a year at $2,000. Some are even throwing out a top end of $3,000 or more. That seems extremely excessive to me, but the $2,000 range is possible. Certainly, $1200 in the short term is likely.
If you are tired of feeding the Vultures of Wall Street., you may wish to investigate this opportunity like I did. I am not risking too much and neither should you. Now, don't take my word for this speculative gold play (or anyone's word for that matter). Do your own research on this or any company you wish to invest in. You may wish to invest in gold by merely buying gold bars or coin or buying ETF's (exchange traded funds of gold stocks) as I am also considering.
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