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CNMC - 213% upside , potential take-over target
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mubbi1
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25-Sep-2013 11:48
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Posted by stockpick12 Very good 213% upside from current level The 80 cent price target is from the Voyage Research Analyst. I posted the link below but I think its a paid subscription - you can try asking your broker about the target price if you are really curious about CNMC - he should be able to check it out for you and tell you the relevant information. A lot of potential in this counter it seems especially since they are poised to deliver 1,000,000 tons of gold for FY 13 with the new technology up and running. http://infopub.sgx.com/FileOpen/SecondLeachYard.ashx?App=Announcement& FileID=256992 Is it a potential take over target or can it reach 80 cents? You decide with your money =) Expect Increase in Production: The anticipated increase in production in 2H 2013 comes on the back of a statement by the company published on 7 August 2013. In the statement, the company clarified that it is ?cautiously? confident that it can achieve mining and production outputs of 400,000 to 500,000 tonnes of ore and 300 to 350 kg of gold dore bars respectively, subject to favourable weather conditions. With the 2Q 2013 results announcement, the company again explained that it had completed the construction of the second leach yard and that a third leach yard is underway. As such, expectations of higher production are justified. Will Low Gold Prices Hurt CNMC? The fall in gold price from more than US$1,600 per ounce to the current US$1,300/US$1,400 range did not affect our valuation of CNMC as we had earlier discounted the high gold prices and valued CNMC?s future gold output based on a subjective gold price of US$1,350 per ounce. In this update, we do not adjust the assumed gold price in our model as gold prices are currently not significantly lower than our assumption. Moreover, upside for CNMC at this juncture stems from its anticipated fast increase in production rather than from gold prices, unlike mature gold mines with more stable production levels. Under the current model, we would have valued CNMC at S$1.158 per share had we assumed gold prices of US$1,600 per ounce. On the other hand, our model would have yielded a valuation of S$0.658 based on an assumed gold price of US$1,250 per ounce. Thus far, CNMC has managed to keep its selling price above US$1,600 in 2H FY13. In our updated model, we continue to assume average selling prices of US$1,350 as we expect more than 80% of full year production to occur in 2H 2013. Production Costs Have Fallen: Since falling |
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