CNMC Goldmine

CNMC Goldmine: 3Q13 net profit doubled y/y to US$2.0m (+95%) mainly due to an overall 33.5% decrease in operating expenses as a result of the lack of ore export sales. Revenue stayed flat at US$6.3m despite a 20% y/y fall in average gold price for 3Q, mitigated by a significant increase (+632%) in fine gold sales due to a major order from a chinese customer which contributed US$5.4m to the top line. The lower operating expenses were from almost negligible contractor expenses (-99%), travelling and transportation (-96%) expenses, lower marketing (-87%) and rental (-42%) costs. Meanwhile, other expenses of US$163m and finance costs of US$21.1m soared, 805% and 771% respectively, from a service fee and a fixed asset write-off. Following the expected completion of the construction on its second and third leach yard in 2H13, CNMC's production capacity is expected to increase by 200% to 1m ores per annum. CNMC's last closing price of 25.5¢ is 6.5x above its NAV of US3.17¢ (S3.94¢).