Timmins Gold Corp's (TSE:TMM)(NYSE MKT:TGD)(AMEX:TGD) target price was raised substantially Wednesday by Canaccord Genuity as the gold producer just announced a record amount of gold output for its third quarter.
Wednesday, Timmins Gold's target price was raised to $2.35 from $1.65 by Canaccord. Indeed, the Mexico-focused gold producer's share price is up almost 40 per cent so far this year.
For the three months that ended September 30, Timmins produced 25,153 ounces of gold, and 13,857 ounces of silver from its San Francisco mine in Sonora, Mexico.
The gold ounces produced were up from 17,287 ounces in the year ago period, an increase of more than 45 per cent, due largely to improvements in process and "commitment to [its] expansion plan", the company said Tuesday, which started late last year.
Modifications to the existing crushing circuit, changes in Timmins' blasting patterns and optimization of its heap leaching process led to the stronger production results.
The company said that 40,490 ounces of gold were placed on heap leach pads, compared to 35,282 ounces a year earlier, with this number set to increase in the remainder of the year as the mine continues expansion.
The higher production led Timmins to sell over 48 per cent more gold in the latest third quarter than the same period last year. The gold miner maintained Tuesday its production target of 100,000 ounces of gold for the year.
The company continues to fund all of its operations, expansion and drilling from existing cash flows, as it believes it will continue to realize from current gold prices, generating "strong margins" and increased cash flow.
Last month, Timmins said its ongoing drill program could also lead to a “significant increase” in the mineral resources at its San Francisco mine, as well as to the discovery of additional satellite deposits.
Drilling continues to extend and expand the mineralization at San Francisco, which is comprised of two pits, the larger San Francisco pit and the La Chicharra pit located approximately 1.5 kilometres to the west.
Canaccord felt more bullish on the gold sector in general on Wednesday, increasing its price forecasts for the yellow metal for the next several years.
The metal has benefited as of late from recent central bank action in the face of slowing global economic growth. Any stimulus measures fan fears of inflation, from which gold benefits as a store of value.
In 2012, Canaccord now projects an average gold price of $1,683 an ounce, up from $1,661 previously, while next year, it projects gold will rise to $1,850 an ounce, up from $1,725.
And in 2014, it now sees an average price of $1,950 an ounce for gold, believing the metal will peak at $2,000 this decade.
Canaccord Genuity also lifted targets on AuRico Gold (TSE:AUQ) (NYSE:AUQ), and Centerra Gold (TSE:CG).
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