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St Andrew Goldfields Ltd.

St Andrew Goldfields Ltd. is a Canadian gold mining and exploration gold mining company with an extensive land package in the Timmins mining district in northeastern Ontario, Canada, which lies within the world famous Abitibi greenstone belt. The company operates the Holt, Holloway and Hislop gold mines, and produced ~100,000 oz gold for 2013. St Andrew controls 120km long package which straddles the Porcupine-Destor Fault Zone, host to numerous gold deposits and mines in the region. The company, using its extensive geological database, is targeting exploration at numerous sites and has focused the exploration program on areas that lie in close proximity to the existing mines and infrastructure. The company is also conducting advanced exploration work at its Taylor project.

Expert Comments:

"St Andrew Goldfields Ltd. is attractive for me because it is priced right. The company has growth potential and no debt. It's trading at around $0.28/share for a market cap of less than US$100M. The market has not taken note of St Andrew because of the tight shareholder structure. A single shareholder owns around 50% of the company so brokers have not really covered the stock, and it is not very liquid as a result. But when you look into the company a little bit deeper, it is currently producing around 100 Koz gold per year in the Timmins mining district on Ontario, Canada, but in Q4/15, it will bring the Taylor mine into production. That could add another 20–30 Koz of high-grade and low-cost production to its portfolio. . .in the last bulk sample, St Andrew put out a very good results from Taylor demonstrating the grades were 20% higher at almost 9 g/t than its forecast. The stock price didn't really react on the news, but I think that's just a function of the market. There is no interest in the sector. This is an opportunity because if it can grow production by 25–30%, it doesn't need to dilute shareholders, and it has another high-grade mine, which is open at depth, gives free cash flow and has no major royalty. That is something investors will really have to pay attention to. Taylor is going to change the whole production profile and financial situation of the company." read more >

Peter Campbell, Mackie Research Capital (8/13/15)
"Yesterday after the close, St Andrew Goldfields Ltd. reported Q2/15 financial results. . .the company reported revenue of $34.4M on the sale of 23,319 oz gold at an average realized price of $1,201/oz or approximately CA$1,475/oz. Adjusted net income came in at $3.3M or $0.01/share and operating cash flow of $9.2M or $0.03/share. . .we are increasing our 12-month target price to CA$0.60/share from CA$0.55/share and maintain our Buy recommendation."

Peter Campbell, Mackie Research Capital (8/5/15)
"St Andrew Goldfields Ltd. has today released drill results from near mine exploration drilling on targets at its main producing assets, the Holloway and Holt mines. The results indicate the potential for resource expansion near active mining areas. . .we continue to recommend the company with a Buy rating."

"Our biggest holding by far in the smaller-cap space and my biggest personal holding is St Andrew Goldfields Ltd., which at the moment is, unbelievably, trading at 1x enterprise value: EBITDA, assuming next year's EBITDA at today's Canadian dollar gold price. Typically, when we see a mining stock trading that low, someone automatically says that it must be a highly leveraged company or it has virtually no mine life. The answer to both is a resounding no. St Andrew has no debt and over $26M in cash, which represents $0.07 a share on a $0.25 share price. And its cash should be climbing materially with the free cash flow it churns out each month. The mine life at the current run rate of production is about eight years and growing. It just added 25% to its reserves at the end of last year. Its NAV is in excess of $0.60 per share. . .all-in sustaining costs are around US$900/oz, and are being helped by a weak Canadian dollar. St Andrew receives revenue in U.S. dollars, but its costs are in Canadian dollars.

TGR: Why is the market punishing St Andrew?

It's a matter of it being under the radar. The company has had virtually no analyst coverage. In fact, an analyst just published the first report on the company in some time. There used to be four or five analysts who covered it, but most of those firms have vanished. Also, there's been little float in the company; it hasn't required any financing over the last number of years. But there is one major catalyst ahead: the Taylor mine is coming on line in the next two months and it should take production from just shy of 100 Koz to 130+ Koz. The low Canadian dollar also helps materially. So we're seeing excellent production growth and low costs, and St Andrew has cash on hand—it's been cash flow positive for around 15 consecutive quarters. . .St. Andrew could become a takeover target. In this industry, one plus one equals more than two, especially when a company is producing more than 300 Koz annually. Plus St Andrew owns 120km of land along the Porcupine-Destor Fault, making it the largest landholder in the Timmins mining camp. There are at least three companies in that camp that could combine with St Andrew to produce over 300 Koz per year, not to mention the synergies of combining with a nearby competitor." read more >

Peter Campbell, Mackie Research Capital (7/29/15)
"We are initiating coverage of St Andrew Goldfields Ltd. with a Buy recommendation and 12-month target price of CA$0.55 per share. We believe that the company has been overlooked by the investment community, potentially due to its past production history, but that it has now achieved steady-state production, which is not yet recognized in its current market valuation. . .we believe that St Andrew will hit guidance and that, in turn, will drive confidence in its story. Production start-up at Taylor is a significant catalyst for St Andrew, which will then have three centers of operation driving its production numbers."

"Our favorite small-cap at the moment is St Andrew Goldfields Ltd. St Andrew is the largest landholder in northern Ontario's Timmins mining camp. It's in a good jurisdiction. The company has production of just shy of 100 Koz, if you annualize its Q1/15 numbers. It has been in the penalty box for over a year because in 2013 St Andrew produced 100 Koz, but in 2014 it took its guidance down to 75–85 Koz, only to reach about 91 Koz gold for the year. The company has had something like 14 consecutive quarters of positive cash flow, but because there is little coverage on the company and only a few hundred thousand shares are traded each day, the company has been underfollowed and largely ignored. Meanwhile all-in sustaining costs should remain below $1,000/oz, and guidance for 2016, with the Taylor mine coming on, is 125-135 Koz—that's meaningful for an orphaned company.
St Andrew should do well into next year as it ramps up production at its Taylor mine, which is already delivering ounces in pre-production, but should reach commercial production later this year. At 130 Koz of production, St Andrew should generate more than CA$65M in EBITDA. St Andrew is trading at one times enterprise value/EBITDA, net of its approximately CA$25M net cash balance, based on CA$65M of EBITDA. I wanted to see how that compared to other stocks in North America, so we screened all the stocks in North America that have enterprise values over $50M. It was No. 3 on the list out of about 1,500 companies. This year St Andrew should generate CA$15M of free cash flow, as it competes its spending on Taylor, and next year in excess of CA$30M. It's trading for about 2.5x free cash flow, net of cash on hand. Trading at around CA$0.29/share, this is an extraordinarily cheap stock.
Today's gold price and a little bit of an inflationary lift to gold over the next few years give St Andrew a NAV above CA$0.60 today—potential future value is even higher as the company increases its reserves, which jumped 25% last year. Most gold companies normally trade above their NAVs. And St Andrew is the cheapest in its universe based on EV/oz, EV/EBITDA and EV/free cash flow." read more >

More Expert Comments

Experts Commenting on This Company

Randall Abramson, Fund Manager – Trapeze Asset Management
Peter Campbell, Analyst – Mackie Research Capital
Michael Fowler, Senior Mining Analyst – Loewen, Ondaatje & McCutcheon
Jeff Killeen, Analyst – CIBC World Markets
Florian Siegfried, Senior Portfolio Manager – AgaNola

The information provided above is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.
Investing Highlights
 
Consistenly delivering on objectives - 14 quarters of positive operating cashflow
 
120 km of highly prospective land in the world-renowned region of Abitibi
 
Great potential for organic growth
catalyst Calendar
St Andrew Goldfields Ltd. Content