Timmins Gold Corp T.TMM

great buying opp ... repost from Jennings Capital

[TraderDad]

Stuart McDougall,   Jennings Capital Inc. (11/02/10)

"Timmins Gold's main asset, San Francisco, began heap-leach production in December 2008 and is forecast to produce an average of 81 Koz./year over seven years at an average cash cost of US$450/oz. We consider the potential for expansion beyond 100 Koz./year to be above-average, noting that an updated reserve and mine plan is nearing completion.

Meanwhile, in late September, Timmins announced that it had submitted a merger proposal with directors of Capital Gold on August 31, 2010. The proposed all-stock transaction would see TMM issue 2.27 shares for every CGC held and was said to have conditional support from CGC shareholders representing over 17% of the total shares outstanding. Capital Gold subsequently announced that it had rejected the offer as not being in the best interest of shareholders, only to then approve a share and cash offer from Gammon Gold. That proposal, which had unanimous CGC board and senior management approval, would see CGC shareholders receive 0.5209 of a GAM share and US
.79 of cash for each share held. We continue to view the TMM offer as the superior offer and more logical merger choice.

We maintain our SPECULATIVE BUY recommendation and we are raising our target to CAD$4.00/fd share from CAD$2.75/share, reflecting our new price deck and the introduction of estimated cash flow in our valuation matrix to account for the company's graduation to producer status."