I don't view the selling by T.A.M. As a negative, other than the obvious short-term SP distortion. TAM has to unwind accounts holding "unappropriate" risk assets as per the OSC decision. The Abrahmson's are pretty big believers in the longer-term value of SAS...
St Andrew’s share price performance has been disappointing, especially in relation to the recent ongoing solid performance of the company. St Andrew’s production has returned to forecast levels and production costs are lower. Yet the trading price remains well below the net asset value, now even at book value, partly because of disappointing performance in the first half of last year but mainly, we think, because gold stocks generally have corrected substantially.
The downside risk would be from a decline in the price of gold. The company should produce about 100,000 ounces in 2012 with further growth ahead. Cash flow this year should be about $50 million, more next year when its gold loan will be gone, and from expected higher production. We still have an upside target of $1.60 in 3 years (assuming even a lower gold price of $1400, at an 8x cash flow multiple). Four times the current share price. At the current price of gold, based on our productions estimates St Andrew could have as much cash in 3 years as today’s share price, so we’d be getting the entire mining operations and other assets free. Not to mention potential resource growth from ongoing exploration on its vast acreage.