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Expert Analysis
Henk Krasenberg, European Gold Centre (3/11/13) "A new prefeasibility report is expected to be issued by midyear. Argonaut Gold Inc. management has set a production target of 300–500 Koz/year as its longer-term target and I am confident they will make it happen."
The Gold Report Interview with Alka Singh (3/1/13) "Argonaut Gold Inc.'s management team is one of the best in the gold sector because they have delivered. They are also frugal and don't overspend. They have always delivered and that has to do with under-promising and over-delivering consistently."
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Expert Analysis
Christos Doulis, Stonecap Securities (2/26/13) "Argonaut Gold Inc. provided 2013 guidance. . .highlights include total 2013 production of 120–140 Koz Au at cash costs of $630–660/oz. . .the company also outlined its 2013 capex and exploration budget, which totaled $57–75M, compared to our previous estimate of $111M. . .we continue to believe that 2013 is a pivotal year for Argonaut and that the current share price represents an attractive entry point. . .we are maintaining our Outperform rating."
Ovais Habib, Scotia Capital (2/25/13) "Argonaut Gold Inc. released 2013 guidance and an exploration update for its 100%-owned Magino gold project in Ontario, Canada . . .newly provided plan and section views of the deposit reinforce our view that the company will focus on a smaller, higher-grade portion of the global resource. . .we rate Argonaut as Sector Outperform. . .2013 guidance is set at 120–140 Koz of gold with cash costs expected between $630–660/oz."
Rahul Paul, Canaccord Genuity (2/25/13) "We maintain our Buy rating on Argonaut Gold Inc. following the release of detailed 2013 guidance. . .it remains a Focus List pick based on attractive valuation in the context of one of the best, fully-funded growth profiles in the sector. . .we see substantial rerating potential on execution on the ramp-ups at El Cantillo and La Colorada, in addition to the advancement of the San Antonio and Magino projects."
Andrew Mikitchook, GMP Securities (2/25/13) "Argonaut Gold Inc. released its FY/13 guidance, which was in line with our expectations. . .infill drilling at the Magino project shows long (30–40m) continuous intercepts of above-resource grades, which should bode well for conversion of inferred ounces to Measured & Inferred, and Measured & Inferred to 2P with the prefeasibility study later in 2013. . .additionally, a new mineralized zone has been intercepted that should warrant continued exploration drilling. . .we maintain our Buy recommendation."
Michael Siperco, Macquarie Capital Markets (2/25/13) "With the stock of Argonaut Gold Inc. trading at current levels, investors are paying only for El Castillo and La Colorada plus the cash on the balance sheet. . .they are getting the development assets for free. . .between cash on hand and $371M in forecast cash flow over the next three years, the company could develop both San Antonio and Magino from internal sources only. . .with potential production of ~500 Koz/year in 2017+ without debt or dilution, we recommend investors buy Argonaut. . .and reiterate our Outperform rating."
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Argonaut Gold Inc. Target $ 14
Posted: January 21, 2013 | Author: jackbassteam | Filed under: Gold, Juniors | Tags: Argonaut Gold, Canadian dollar, El Castillo, La Colorada, Record producer, San Antonio, Target Corporation, Toronto Stock Exchange |Leave a comment »
Argonaut Gold Inc.
AR : TSX : C$10.09
BUY Target: C$14.00
BEATS GUIDANCE AFTER RAISING IT TWICE IN 2012
Investment recommendation
BUY rating on Argonaut Gold following the release of Q4/12 and 2012 production results that were ahead of guidance and our estimates.
The team’s operational track record has been excellent in 2012, highlighted by production results that beat the high end of revised guidance
(even after raising guidance twice last year). Argonaut Gold remains a Canaccord Pick based on attractive valuation in the
context of one of the best, fully funded growth profiles in the sector. With a proven management team at the helm and expected continued strong
operational momentum over the next 12 months, substantial re-rating potential follows execution on the ramp-ups at El Castillo and La Colorada,
in addition to the advancement of the San Antonio and Magino projects.
Investment highlights
Despite raising guidance twice during the year, 2012 production of 108,081 still beat the high end of revised guidance (101,000 to 103,000
oz) by 5%. Production beat expectations at both El Castillo (better than expected grades and implied recoveries) and at La Colorada (mostly
higher recoveries, but also higher grades due to positive grade reconciliation). While actual cash costs were not provided, we estimate cash costs of $605/oz for the full year 2012, which would be below the low end of official guidance of $625- $650/oz.
Only partial guidance was provided for 2013, with El Castillo expected to produce between 5-10% more gold than in 2012, implying production
of 92,000 to 96,000 oz (our previous estimate was 92,000 oz). Our Q4/12 EPS estimate has increased to $0.14 (from $0.12) based on better than expected gold sales. Our 2013 production estimate has been revised to 131,000 oz at cash costs of $647/oz (from 136,000 oz at $637/oz) explained by high gold production at El Castillo offset by lower estimated production at La Colorada (no guidance provided but slower ramp-up assumed). Our 2013 EPS estimate is now $0.56 (previously $0.59).
Valuation
Our 12-month target remains unchanged at C$14.00 based on 1.0x our 5%/peak NAVPS estimate of US$13.95 assuming US$/C$ parity.
Expert Analysis
Rahul Paul, Canaccord Genuity (1/18/13) "We maintain our Buy rating on Argonaut Gold Inc. following the release of Q4/12 and 2012 production results that were ahead of guidance and our estimates. . .the [management] team's operational track record has been excellent in 2012, highlighted by production results that beat the high end of revised estimates (even after raising guidance twice last year). . .the company remains a Canaccord Genuity Focus List pick based on attractive valuation in the context of one of the best, fully funded growth profiles in the sector."
Christos Doulis, Stonecap Securities (1/18/13) "Argonaut Gold Inc. provided its Q4/12 operating results and 2013 guidance for El Castillo. . .highlights include record Q4/12 production of 32 Koz Au, handily beating guidance of 25–27Koz. . .El Castillo production of 25.8 Koz, ahead of guidance of 22–23 Koz. . .total production in 2012 was 108 Koz, significantly beating guidance of 88–97 Koz and revised guidance of 101–103 Koz. . .the company expects 2013 production to increase by 5–10% at El Castillo. . .and we believe this is conservative guidance."
Craig West, GMP Securities (1/17/13) "Another record quarter for Argonaut Gold Inc. is good news for; while we had expected a strong quarter out of El Castillo, production of 25.8 Koz beat our expectations by over 3 Koz. . .the company's share price continues to outperform. . .given the markets appetite for lower-risk and strong cash generation, we expect interest in names like Argonaut, with simple, open-pit, heap-leach operations, low capital, low all-in costs, will continue."
Henk Krasenberg, Goldview (1/15/13) "Argonaut Gold Inc. is looking to make further progress in attaining their production target of 300 Koz to 500 Koz in the next few years. . .the expanding El Castillo and La Colorada mines will be joined in Mexico from the advanced San Antonio project and the recently acquired Magino mine in Ontario. . .at the end of 2012, the company strengthened its balance sheet further through the exercise of warrants that brought in $115M."
Argonaut Gold Inc.
$ 9.54
-0.34 (-3.44%)
Volume: 228.09 k
4:00 PM EST Jan 23, 2013
Current Target Price
High Target Price Estimate
16.00
Low Target Price Estimate
8.60
Mean Target Price Estimate
13.20
Standard Deviation
2.36
Date of Most Recent Estimate
01/17/13
Analyst Recommendations
Analysts recommending Strong Buy
5
Analysts recommending Moderate Buy
2
Analysts recommending Hold
1
Analysts recommending Moderate Sell
0
Analysts recommending Strong Sell
1
