WGDF.OB aka Western Goldfields is a Gold mining company that popped up on my technical filter today with quite an impressive symmetrical chart pattern breakout on todays close. Looking forward the company has very strong estimates for 08' and beyond from there Mesquite mine with an estimated 160k - 170k in annual production of gold from the period of 2008 - 2015.
So given lets say an a conservative average gold price of $650. This would mean gold price doesn't change from todays price.
at 170k ounces/year thats $110.5m annual gold sales and they're expecting cost of sales to be $350/ounce of gold mined totaling $59.5m in COGS resulting in an attractive 46% gross margin.
WGDF's financial condition is also very impressive as well. Currently they're sitting on $57.1m in cash with an astonishing 21.8 current ratio compared to the gold and silver industries 2.9! As well WGDF has no long term debt they're in a very good position to move forward with production and growth in the coming years.
Currently WGDF shows no profits or significant sales. Analysts are expecting EPS of .14 for 2008 with a high estimate of .39 on sales of 74.28m or 4457% growth from this years estimate. The Gold and Silver industry PE is currently trading at 28.5x earnings. While WGDF currently doesn't have a postive PE ratio they have a very attractive forward PE of just 10.45x earnings meaning that price will like continue its bullish trend to become fairly valued in the industry in the future.
Today WGDF released a very positive PR announcing production ahead of schedule by 3 months which gave way to todays bullish breakout.
Western Goldfields Announces Production Ahead of Schedule by Three Months
Monday June 18, 1:31 pm ET
- Full production pulled forward to January 2008
- Prestrip mining commenced June 2007
TORONTO, June 18 /PRNewswire-FirstCall/ - Western Goldfields, Inc. (TSX:WGI, OTC BB:WGDF.OB) today announced that it has pulled forward gold production at its Mesquite Mine to January 2008, three months ahead of schedule. Estimated average annual production is 160,000 - 170,000 ounces of gold for the period 2008 - 2015. In addition, the Company announced that its prestrip mining commenced in June 2007. All currency amounts are in U.S. dollars.
"This acceleration of production is very exciting news for our shareholders," said Randall Oliphant, Chairman. "This marks an important step in the transformation of Western Goldfields from a developer to a producer - only 22 months after our management team joined the Company. The completion of our financing and entering into the forward sales program, announced on June 14th, allows us to move forward rapidly with mining and construction. We expect to realize cash flow from operations much sooner, with a full year of gold production in 2008, which should translate into enhanced shareholder value."
Three of fourteen Terex 205-ton haul trucks have arrived at the Mesquite Mine site, along with two O&K RH 340, 45 cubic yard hydraulic shovels. The shovels are fully commissioned and one is currently operating. All other critical mining equipment has been assembled and commissioned. These steps will allow the Mesquite Mine to ramp up production quickly as additional haul trucks are delivered, commissioned and put into service.
Under this new production schedule, estimated average cost of sales has increased from $335 per ounce to $350 per ounce for the first eight years of the mine plan. This increase is due to the operating costs associated with the purchase of one additional truck, the escalating cost of employment insurance in California, and enhanced employee benefits.
Initial capital costs are estimated at $108.6 million, unchanged from previously announced estimates. The mine life was lengthened to 12 years from an initial 9-1/2 years due to the increase in gold reserves. As a result, life-of-mine capital costs have increased marginally from $112.5 million to $114.9 million, due to increased estimates for fleet rebuild costs over the extended life of the mine.
I think this is a very attractive stock and we should be able to pull out a decent gain on this trade. I'll be looking to buy this tomorrow hopefully in the range of 2.20 - 2.30 or so.