Scotia rate TMM Sector Perform with a C$2.25 one yr target Company Profile
Timmins Gold Corp. (Timmins) is a Vancouver-based gold producer with the operating
San Francisco open-pit heap leach gold mine in Sonora, Mexico. The company plans to
continue building shareholder value through optimization of gold production at San
Francisco, the exploration and development of existing projects, and by actively
pursuing accretive transactions.
Business Mix (Based on revenues unless otherwise noted)
100% Gold
Comparable Companies (TSX unless otherwise noted)
AGI, ANV, AR, ASR, P, RIO
Recent Update Text as of 21MAY14
. We visited Timmins' 100%-owned San Francisco gold mine in Sonora, Mexico on May
20, 2014.
. Overall we were impressed with the management and site conditions at San
Francisco, which seemed more organized with the new crushing circuit and leach
pads compared to the October 2012 tour.
. Studies are ongoing to assess if development of the La Chicharra pit is economic
at $1,300/oz with a focus on reducing the cost of pre-stripping ($12M) and
crusher installation ($8M), undertaking a potentially staged approach, and
assessing possible mining cost savings due to softer rock compared to San
Francisco.
. Optimization of the current operations continues and Timmins is evaluating a
number of opportunities to further increase gold recoveries including the
addition of an agglomerator to pre-leach the ore, increase the moisture content,
and decrease cyanide consumption. The cyanide and mining contracts have been
renegotiated and the workforce has been reduced by an additional 50 employees.
. Details of the $5M 2014 exploration program should be announced shortly, but the
company did indicate that Vetatierra and Marisol would be the main targets. The
program is expected to begin in approximately three weeks once permits are
awarded.
. We rate Timmins Sector Perform with a C$2.25 one-year target price.