Casimir Capital maintained its "strong buy" recommendation and $4.25 price target on Timmins Gold (TSE:TMM)(NYSE MKT:TGD)(AMEX:TGD) Wednesday, after the gold miner released results from bulk sample leach testing at its San Francisco mine in Mexico, showing average gold extraction rates as high as 80.9 per cent.
The program entailed five composite samples from the San Francisco deposit and one from the La Chicharra deposit, varied by rock type.
Individual columns contained 178 kilograms of material, crushed to 3/8” and 1/4”, and then held under leach for 127 days to conform to actual operations.
The miner, which is in commerical production at its San Francisco gold mine in Sonora, Mexico, said that no percolation issues were seen in the locked cycle tests.
Based on relative abundance of each rock type in the deposit, weighted average recoveries from the coarser crush corroborated life-of-mine expectations, averaging 71% for San Francisco and 78.3% for La Chicharra, Casimir analyst Stuart McDougall notes.
For reserves and budgeting purposes, Timmins assumes an average life-of-mine recovery of 68.6%.
Timmins Gold plans to begin pre-stripping at the satellite La Chicharra deposit - located 1.5 km west of the San Francisco pit - in the current quarter and to follow up with full operations in March 2013, at a rate of 8,000 tonnes per day.
The Casimir report adds that thereafter, the combined production rates from the two deposits are expected to average 130,000 ounces per year, or 30 per cent higher than 2012 guidance from the San Francisco deposit alone.
McDougall concludes: "Although the update supports our own projections, we were expecting them to do so and hence, have made no changes to our model.
"Accordingly, our target and recommendation remain unchanged, though we would note that the company’s production projections are slightly higher than our own, giving us room to increase future projections as actual operating results are reported."
Earlier this month, the precious metals producer saw another strong quarter as it tripled its earnings per share, with metal revenues rising 48 per cent.
For the three months that ended September 30, the Mexico-focused gold producer reported earnings of $13.1 million, or 9 cents per share, compared to $3.6 million, or 3 cents per share, a year ago.
Profit from operations at its San Francisco gold mine was $18.3 million, compared to $10.3 million during the same prior year period. Metal revenues rose 48 per cent to $41.7 million, as the miner sold significantly more gold and silver.
The Canadian company produced a record 25,153 ounces of gold, up 46 per cent from a year ago.
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