Worth a 3rd Look
Timmins is adding an additional crusher this fall to take the company up to 25,000 tpd. That should add an additional 25,000 to 30,000 ounces of gold per year of production. Remember, as gold goes up $100 an ounce, when Timmins does 125,000 ounces of gold, they add $12.5 million to PROFIT.
In the last year, Timmins was drilling with limited resources. The gold reserve went from 611,000 ounces up to 780,000 ounces and all resources went up to 1.2 million ounces in all categories. Between July of 2010 and this last March, TMM drilled another 85,000 meters. They have not released the updated 43-101. Their resource will go up. They just announced some outstanding drill results coming from the 10 drill rigs turning.
Production of over 100,000 ounces of gold at $1600 would bring in over $160 million dollars in cash flow. At today's price of $2.58, the company has a market cap of about $354 million. The company is a natural takeover candidate for any major looking for a production story with a known resource. A takeover price would be in the $400-$700 range per ounce.
The company may be a better and safer place to get in than when I wrote about them the two times before. Pacific Road Capital bought 19.5% of the shares at an average price of $.90 and made it be known they wanted to sell. That created a big overhang. Timmins put together a group to buy those shares at $2.51. That transaction closed on July 21. That's a big plus.
In 1980 silver and gold prices topped in January. Even though they crashed from the incredible prices of $875 for gold and $50 for silver, the shares didn't move up with the metals in late 1979 and 1980. Even after the crash in prices of silver and gold, the share prices of the juniors soared to new highs in late 1980.
We just had a big crash in silver in May and a small correction in gold but the metals shares are priced cheaper relative to the price of the metals than they were in 2001 at the bottom. Once we get through the summer doldrums and fall stock market crash, I see a giant move higher in gold and silver shares.
I've indicated three different times that Timmins shares were cheap and headed higher. I've been right the first two times and I don't doubt I'll be right this time. Timmins has excellent management, is cashed up, is drilling to beat the band and will soon come out with an exciting and bigger 43-101 in my view. It's cheap.
Timmins has been a long time advertiser
and we are biased. The company does a wonderful job of communication
and is easy to reach. I encourage every potential investor to
contact the company with any questions or concerns. You are responsible
for your own investment decisions.
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