Southern Cross Goldfields Ltd: SXG Southern Cross Goldfields already has significant gold resources of 436,000 ounces defined at its portfolio of projects located in the Southern Cross / Marvel Loch Area of WA. The EV of about $20 per ounce is low compared to its peers so there should be plenty of upside in the future especially if the current drilling program continues to grow the resource and the current feasibility study shows a profitable mining operation can be developed. The last program of infill drilling at Dolly Pot and Dugite resulted in some great intersections including 25m @ 3.3g/t Au from 23m and 11m @ 4.6g/t Au from 4m (an updated resource estimate is still awaited). With grades like these and being so close to the surface, the company expects production costs to be in the range of $750-$800 per ounce. A feasibility study is in progress (to be completed during the September Quarter of 2011) to evaluate the development of a 400,000 tonnes per annum processing facility at Marda which would produce around 30,000 ounces per year from 2012 for an initial period of three years plus potential for another two years from existing inferred resources. The initial production would be supported from reserves which are located on granted mining leases which the company owns. News Due: Updated mineral resource estimates for the Dolly Pot and Dugite deposits. Drilling results from the Golden Orb deposit which currently contains 71,000oz of gold. Price Target: There are multiple resistance levels between the current price of 6.9 cents and 8.5 cents however the stock has a spiked to prices above 10 cents three times since early February so much higher prices are possible on announcements with good news. Disclosure: Holding SXG
SXG Price at posting:
6.4¢ Sentiment: Buy Disclosure: Held
