-- Posted Wednesday, 12 August 2009 | Digg This Article
| | Source: GoldSeek.com
We at the German mining newsletter DER GOLDREPORT (www.dergoldreport.de), have several Australian mining companies on our watch list and when comparing to most of the worldwide competitors they are pretty cheap!
One good example is the Australian gold mining company FOCUS MINERALS (ASX: FML). FOCUS MINERALS is the largest landholder in the Coolgardie Greenstone Belt located in Western Australia, 560km east of Perth and 35km west of the ‘Super Pit’ in Kalgoorlie-Boulder. More than 2.6 million ounces of gold has been produced from the Coolgardie gold belt alone since 1892. Focus holds the mineral rights to more than 210sq km of tenements including an extensive inventory of Measured, Indicated and Inferred gold resources as well as the 1.2mtpa Three Mile Hill processing plant. While the company is refurbishing its own Three Mile Hill processing plant (fixed fee of AUD$17 million) they are maintaining cash flow by paying for ore to be toll treated at the private owned Greenfields mill.
At the end of June FOCUS MINERALS completed its eighth milling campaign since production began in April 2008. The recent campaign started on 1 May 2009 and concluded on 22 June for a total of 45 effective milling days. The milling campaign was very successful, netting a record 19,226 ounces of gold with recoveries exceeding 95%. Total production for the financial year (30th of June 2009) totals 41,401 ounces of gold! The cash costs for the year have been around AUD$600 an ounce. FOCUS MINERALS is on target to increase the production to 80,000 ounces for the 2010 calendar year and then 100,000 ounces in 2011.
FOCUS received a loan for AUD$15 million dollars and they will be repaying the loan by the end of this year through the proceeds of their gold sales. To date there remains only AUD$7 million to repay. FOCUS MINERALS have been very aggressive in repaying this loan as they feel that it is important to be debt free as soon as possible.
As part of the terms of the loan they were obliged to take a small hedging position. During the last campaign they delivered into 10,000 ounces of these forwards at a price of AUD$976/ounce. FOCUS MINERALS now has 9,378 ounces of hedging left which will be closed out in the next milling campaign starting in September. From there FOCUS MINERALS will be hedge free moving into 2010 and able to take advantage of what we feel will be a very strong gold price.
At the moment, FOCUS MINERALS has a market capitalization of around AUD$63 million. With the AUD$28 million capital raising they did earlier this year and the cash flow out of the gold production, they have a comfortable cash position.
Targeting production of 80,000 ounces of gold for the next 12 months will create a revenue of AUD$80 million to AUD$100 million for the company! With planned production costs under AUD$600 and a current gold price of AUD$1.100 they will earn around AUD$500 per ounce of gold produced.
We consider FOCUS MINERALS is a great opportunity with lots of upside potential in the next months and years. At the end of this year they will have their own processing plant running and will be hedge and debt free and the production keeps growing.
On the other hand FOCUS MINERALS has good exploration potential on their large land holdings in the Coolgardie Greenstone Belt and they are looking right now to increase their overall resource of around 1.8 million ounces of gold with the recently commenced drilling campaigns.
For more information about FOCUS MINERALS you can visit the following homepage of the company: www.focusminerals.com.au
If you would like to get more information about our newsletter DER GOLDREPORT please visit us on our homepage: www.dergoldreport.de
Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company's share price.
Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.
-- Posted Wednesday, 12 August 2009 | Digg This Article | Source: GoldSeek.com
