CNMC Goldmine

CNMC Goldmine: SIAS expect CNMC to continue ramping up production out of the heap leach in 2013. Therefore, 2013 will most likely be a bumper year for the company. Nonetheless, growth will be most obvious in 2Q and 3Q 2013 as 1Q and 4Q production tends to be affected by seasonal wet weather. SIAS noted that for FY12, production cost/ ounce was about US$1,332 based on gold revenue of US$7.48m and EBIT of US$1.30m. Production cost was US$2,055 and US$4,597 per ounce in 2011 and 2010 respectively. The sharp reduction in cost was in part driven by income earned from the sale of by-products silver, lead and zinc, as well as economies of scale. Gold price has fallen from a high of US$1,800/ounce to about US$1,600 per ounce over the last 12 months, and CNMC has in 2012 diverted efforts into non-gold production in Sokor and explored non-gold opportunities outside of Sokor to reduce risks to any single commodity. Spot gold prices currently remain above SIAS input assumptions of US$1,400 per ounce. House has an INCREASE EXPOSURE with TP of $0.80.