DESCRIPTION: Capital Gold is a profitable producing gold mining company. The company owns and operates the El Chanate open-pit gold mine in Sonora, Mexico, which is currently producing at an annualized rate of over 60,000 ounces. On August 3, 2010, the company acquired Nayarit Gold, Inc. and merged it into Capital Gold's wholly owned subsidiary. Capital Gold is focused on increasing production at El Chanate and advancing to production the Del Norte deposit in Nayarit, Mexico. WEBSITE: http://www.capitalgoldcorp.com Corporate Fact Sheet (8/11/10)Third Quater Financials (6/22/10)S&P Research Report (5/20/10)Annual Report (2009)
The information provided below is based on the most recent information we have received from analysts, newsletters and other contributors to Streetwise Reports' The Gold Report or The Energy Report. We encourage you to visit the company's web site and call the company for more specifics on this company before you decide to invest.
"Shares of CGC have performed poorly as of late mostly due in my opinion with the market’s reaction to the acquisition of Nayarit. Our share price, which now stands at $3.53 (or $0.88 cents before the reverse split), is a disappointment at this time. With that being said, the company can still have a bright future as gold prices go to much higher levels and we keep increasing production and adding to reserves.
Exploration work underway at the El Chanate Mine should build more ounces to reserves and help offset what we are producing, adding significant mine life. The potential to seriously grow the deposit at El Chanate still ex¬ists, but the company is looking to add resources from their two other key projects as well, one of which (Orion) came from the Nayarit acquisition."
Adam Graf, Dahlman Rose & Co.
(08/25/10)
"Q410 and FY2010 Results Show 40% q/q & 12% y/y Production Growth
Capital Gold reported their fiscal Q410 (ended July 31, 2010) results where they produced 15.2 Koz. gold, a 40% increase compared to the same period a year ago; however, this is an 8% decrease compared to fiscal Q310. Capital produced 55.7 Koz. in FY10, compared to 49.9 Koz. in FY09, a 12% y/y increase. This y/y increase is largely the result of increased ore tonnage stacked and processed throughout the year.
Outlook for Fiscal 2011 In fiscal 2011, Capital Gold expects to produce 65–70 Koz. gold. Further, they expect to produce up to 120K gold equivalent ounces by 2013. Capital expects to continue to enhance their agglomeration and leaching practices and to continue in-fill drilling at their El Chanate mine, followed by an updated resource estimate in fiscal 2011. The construction of an additional heap leach pad has commenced and will be available for stacking ore in November 2010, and then later expanded with completion expected in May 2011. The company continues to evaluate a crusher capacity increase of 20%, as well as transitioning from a contractor mine fleet to an owner/operator mine fleet. Finally, the Orion project will progress to the prefeasibility stage by Q211."
Stuart McDougall, Jennings Capital Inc.
(08/17/10)
"The company's sole-producing asset, El Chanate, has been profitable ever since commercial operations began on August 1, 2007. As of October 1, 2009, Proven and Probable Reserves stood at 70.6 Mt. grading 0.66 g/t gold, sufficient to support current production rates for 12 years. We see production increasing from 56 Koz. in FY10 to 67 Koz. in FY11, at a total cash cost of $431/oz., net of silver credits.
On August 2, 2010, CGC successfully completed a merger with Nayarit Gold. . .the merger adds near-term production growth in the form of the advanced Orion gold/silver project in Nayarit State. In February 2010, SRK Consulting concluded that Orion's Animas/Del Norte deposit could support an underground mining operation to produce 106 Koz. gold and 10 Moz. silver over five years, at an average life-of-mine cash cost of $320/oz. gold eq. Orion also provides untested blue sky in the form of numerous epithermal targets and historic mines in a metallogenic province renowned for its mineral prolificacy. We are resuming coverage of CGC with a BUY recommendation and 12-month target of C$5.75/share."
Greg McCoach, Mining Speculator
(06/23/10)
"Shares of CGC have done rather well of late despite the market. I believe this happening in anticipa-tion of the vote on the Nayarit deal, which in my opinion is not good for shareholders of Capital Gold. I vote 'NO' on this merger, but the key players in this decision are the largest shareholders which are Sprott and Van Eck Funds.
I am not sure how they view this, but I would nix the Nayarit deal and look for something better to acquire and a much more reasonable price.
There will be a special board meeting in early July to vote on this deal, but again I hope it does not go through. . ."
Adam Graf, Dahlman Rose & Co.
(06/10/10)
"Capital Gold continues to realize increased production, yielding higher sales volume and net income growth despite increasing costs. Using the current forward curves, we calculate an NAV of $8.61/sh.
Revenue Grows 41% on Gold Prices and Sales Volume: Capital Gold produced 16.5K ounces gold in 3Q10, or 22% more y/y and 37% more than 2Q10. This growth is attributable to the 30% increase in ore tonnage processed y/y and 12% increase from 2Q10 due to the additional ore stacked in previous quarters. The company reported sales of $17.5MM in 3Q10 on gold ounces sales of 15.7K ounces at an average realized price of $1,113/oz. Compared to 3Q09, this is a 41% increase on revenue, an 18% increase on gold sales volume, and a 19.8% increase on gold metal price realized.
Costs Increase on Operating and One-Time SG&A Items: Both operating and SG&A costs increased y/y and q/q as the company processed 31% more ore tons y/y and 13% more from 2Q10. This additional processed tonnage increases consumables costs, such as diesel fuel, explosives, processing/acid costs, and power. The strip ratio also increased 65% both y/y and from 2Q10 as the pit deepens and more waste must be removed to access the ore. Additionally, the company realized a 176% increase in SG&A costs in 3Q10 due to one-time severance payments to the departing CEO and COO/ President. Overall, cash costs were $403/oz in 3Q10 compared to $263/oz in 3Q09 and $372/ oz in 2Q10.
Net Income Increases 9% and Cash From Operations Grows 33% Y/Y: Net Income in 3Q10 rose 9% y/y due to stronger metal prices and higher sales volume, partially offset by increased operating and SG&A costs. Additionally, the company generated $9.7MM in cash from operations, representing a 33% increase y/y and ended the quarter with $9.2MM in cash. The company maintains their 2010 guidance of operating the El Chanate mine at 70K oz/yr production rate by the end of year. Management noted that the merger between Capital Gold and Nayarit Gold is currently seeking shareholder approval."
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