re: Ann: EVG Updates Results from San Gerardo...
Hi guys,
I haven't posted on here for a while as I've been focused on other things. However, given the state of the markets at present I think it is important to focus on EVG's company specific progress and not be 'scared' into selling your shares.
I have had a few phone calls from friends in the past couple of days wondering whether they should sell EVG and lock in profits... each to their own... but I'm not selling.
GOLD
Gold continues to hit new highs and silver is strong also. With news overnight that the ECB could start buying Spanish and Italian debt it will only reduce the 'value' of fiat currencies further along with the USD and the Yen (Note BOJ now also intervening to lower the Yen).
The current spot prices for both gold and silver are so much higher than EVG is using in its NPV and cash flow models for LL that it is worth bearing that in mind when doing calcs such as EV/ oz, etc as well as where you think Au/ Ag could go given the terrible monetary/ fiscal situation for nearly all developed countries...
LAS LAGUNAS
Effectively on time and budget (give a few weeks and $1m) which is a pretty impressive achievement IMO.
EVG will be pouring gold at a very opportune time in Au/ Ag cycle and, IMO, will be generating much larger quantities of free cash flows than their current models indicate.
In addition, EVG has some excellent uses for that cash.
NOVUS
The Novus deal is an excellent one. There is some data on the Novus website regarding the technical aspects of the two DR concessions that EVG is farming into. They have the potential to be very large 'blue sky' opportunities for EVG to aggressively grow its business model in a reasonable time frame. Also of note is that one of the properties is drill ready.
DR EXPLORATION
The copper tenement currently being applied for in the DR is very prospective for Cu and is a massive property. There is indication of mineralised rocks all over the tenement and this must be an exciting area to explore.
SAN GERARDO
We know that there is a truck load of high grade gold on the property from the seven operating mines.
This just gets better and better. The Cu-Mo anomaly is massive in scale - 100+ ha. When I first saw the soil grab samples I wasn't too sure whether they were good or not (not being a mining expert) but I have since been told that they are certainly good! I note the language in the technical report "OUTSTANDING for both grade and scale".
My understanding is that the Cu-Mo in the soil samples indicate that the minerals have migrated upward through the strata from an ore body (all speculative at this stage). The grades of 0.1-0.3% Cu in the soil are pretty impressive, especially given that resources and economic ore bodies come in at around circa 0.6% (e.g. RXM @ 0.7% Cu). This is very positive.
I have also been told, anecdotally that San Gerardo could be more endowed with minerals than some of its big name neighbours... but time will tell.
CANADA
The Australian market just doesn't appreciate EVG or truly understand its geographical area of operations. A TSX listing and Canadian base of operations will certainly change this.
In the past three months there has been 856 merger and acquisitions of GOLD companies totaling $57b in the Canadian equity market (Resource Investing News 04/08/2011). Not that I want EVG taken over, but it shows you that gold companies are hot over there at present.
EVG STORY
EVG will soon be:
Production + Development + Blue sky exploration upside
Market cap of $90m... not for long IMO.
Over the past year I've built a good relationship with BJ. He told me once that he wanted to get EVG to +$100m pa net profit and a market cap of +$750m. Looking at both the asset portfolio EVG is building up and the people heading the Company I can see that this is more than just cheap talk.
Don't let the market plunge scare you out of your EVG shares.
Cheers John
EVG Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
