Post by
bbarberayr on Jan 20, 2009 4:35pm
BMO Report
BMO now predicting a loss of $0.35 per share in 2009. This is mainly due to non-cash charges due to their gold hedges at $803 per ounce. Because of the way they classify these hedges, they must account for any changes in P&L.
This charge for 2009 is $66 million and changes a $22 million pre-tax profit into a $46 million loss. EPS for 2010 to 2012 are now $0.19, $0.32, $0.48. Positive cash flow expected for 2009 of $0.28, then around $0.50 for 2010 through 2012.
Their recommendation is:
Western Goldfields continues to ramp up production at its Mesquite gold mine in California. We estimate year-over-year production could increase by 33% between 2008 and 2009, and by 20% between 2009 and 2010. Although earnings are likely to be highly variable from quarter to quarter due to the accounting impact of factors such as marking-to market the company’s gold hedge and inventory adjustments, these items do not impact cash flow.
Mesquite is a well-managed, run-of-mine open-pit heap leach gold mine that we expect will require minimal capital and will generate stable free cash flow in the coming years. We are maintaining our target price of C$3 and continue to rate Western Goldfields Outperform.
Comment by
babedinkleman on Jan 20, 2009 7:00pm
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