TD's view of Timmins: Jan 12 2017 Timmins Gold Corp.
(TMM-T, TGD-N) C$0.43 | US$.33
Rounding Out 2016 with Another Solid Operating Result
Steven Green, CFA
Daryl Young, CFA, CA
Event
Timmins reported preliminary Q4/16 operating results and 2017 guidance.
Impact: SLIGHTLY POSITIVE
Q4 productionof 25,287 ounces was 10% above our estimate of 23,015 ounces,reflecting higher recoveries.
Cash costs were not provided; we model Q4 costs of $779/oz.
2017 guidance:
The company has increased its 2017 guidance to a range
of 70k-75k ounces from 65k-70k ounces previously. Previously, we had been modelling production at the high end of the range. Cash cost guidance remainsunchanged at $900-$950/oz.
Management continues to guide for operation of the San Francisco mine until 2023, producing a total of 450k-500k oz of gold at an average cash cost of $900-$950/oz.
Ana Paula work continues according to plan:
Management indicated that pre-construction works are progressing according to plan, with feasibility engineering,metallurgical testing, and geo-technical studies all underway. The company's 20,000-meter drill program (infill, geo-technical, and condemnation) is nearing completion.
We have incorporated the Q4 results and made minor revisions to our forecasts; our NAV has increased slightly to C$0.85/share from C$0.83/share previously, reflectingminor revisions to our model.
TD Investment Conclusion
We are maintaining our BUY recommendation and increasing our target priceto C$1.00 from C$0.90 previously.
With the optionality of the producing San Francisco mine and the new management's focus on surfacing value for Ana Paula, which has favourable economics, we continue to believe that there is value to be
surfaced.
We view the company as a potential acquisition target.