Chris Charlwood has very kindly sent us this missive updating us on the current state of play over at High River Gold Mines Limited (HRG) which we hope that you find interesting and informative.
Olma Investment Company has increased its target price of High River Gold to $1.82 based on the Q1 2010 results – a 117% increase from today’s share price. Production problems (seen to be as one time) caused production to drop to 77.8K oz from 94.6k oz in Q4. However, the company was able to retain much of its previous quarter’s profit ($27.3M versus $31.6M in Q4) due to cost controls. HRG has reduced its debt down to $62.6M and is expected to pass the tests with Royal Gold to release its third party investments as collateral. Olma shows the company as having a negative net debt (surplus) of $19.9M.
Things to look forward to?
1. Royal Gold to release 3rd party investments of $78.4M (current values).
2. Bissa Feasability study completion with multi million oz potential.
3. Drilling program to extend mine life at Irokinda and Zun-Holba.
4. From Q1 MD&A; “The new mill at Berezitovy should enable increased production in the second half of 2010. Further operational improvements planned for Taparko may result in higher production in the second half of 2010.”
5. Q2 gold prices looking to be $1185/oz avg. compared to $1109/oz avg. in Q1.
6. Severstal Gold possibly announcing an IPO with market cap. in the $4.2B range. With HRG making up 63% of total production in Q1 (77.8k oz vs.123k oz), on a production basis only, this would value HRG at $2.65B or $3.31/share.
HRG has a very committed minority shareholder base with very little selling. However, HRG needs new investors buying shares to move the price up significantly. We are hoping that Severstal/HRG management will begin to promote the HRG story by pursuing research coverage from investment banks, presenting at mining and investment shows and hiring an Investor Relations firms.
HRG Q1 2010 results
Olma Investment report
Third party Investments
So there we have it, as usual we are still holding on to this stock.
Keep smiling its all falling into place for gold and silver bugs.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
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