From Byron...WOW .16 per share in 2011DC: Our favorite name has been Yukon-Nevada Gold Corp. (TSX:YNG).Yukon Nevada just commissioned the Jerritt Canyon Mine in Nevada and ithas the Ketza River Project in the Yukon. Yukon Nevada is producing atJerritt Canyon and is on the verge of commercial production. So it'semerging from an obscure turnaround story into a cash flow generatingminer.
The company has already surpassed my estimated output ratesfor 2010 and has positioned itself to post strong production numbers forthe remainder of 2010 and 2011. We are extremely encouraged by theprogress made at Jerritt Canyon.
In the Yukon, Ketza is a high-grade, past-producing projectsurrounded by infrastructure. It is currently undergoing a promising andfully funded exploration program. We estimate that the open-pitoperation would require a relatively small capital outlay of around $25million and would produce at a minimum of 62,000 ounces annually for 7.5years at a cash costs around $365.
Why we like Yukon Nevada is not only for its production growthand its development project in the pipeline, but also because of thefact that it's still got a table-pounding value proposition. Our 2011production forecast, 237,000 ounces, produces a cash flow estimate of
.16 a share. That puts the forward price multiple of our estimatedcash flow at a little over three times, a level normally not seen byanyone generating such significant profitable gold production.
With the profile for 2011, we see the likelihood of YNG being re-rated as an intermediate producer as inevitable.
TGR: Any other producers you like?
DC: We like Avion Gold Corp. (TSX.V:AVR; OTCQX:AVGCF)as well. Avion holds interests in numerous projects in Mali,principally the Segala and Tabakoto Projects, in addition to the Houndéconcessions located in Burkina Faso. It is currently producing between75,000 and 85,000 ounces in Mali, and Avion is poised to grow theiroutput rate to 200,000 ounces by 2012, according to management.
Production aside, I see the real source of Avion's growthbeing the exploration upside through both the drill bit and potentiallymore strategic acquisitions similar to those they've conducted in theregion to date. Avion is already conducting a $10 million, 60,000-meterdrill program in 2010 on its land package. I believe it will continue toyield strong drill results.
Recently they tied up a property that