Mandalay Resources (TSE:MND) remains one of London-based broker RFC Ambrian’s favourite gold and silver miners following another quarter of record production at its Costerfield mine.
The broker expects Mandalay to continue to meet its targets this year and is confident the miner’s 2013 production guidance is more than achievable.
RFC Ambrian also expects Mandalay to be “significantly profitable” this financial year despite the recent falls in precious metal prices.
Revenues are forecast to be derived 52% from silver, 33% from gold and 15% from antimony, with cash margins of about 58% per tonne (ie, a US$170/t cash cost vs US$400/t revenue).
Mandalay is looking to boost production at both Costerfield and also at Cerro Bayo, its other producing mine.
RFC Ambrian said it will be able to mine the recently-discovered Cuffley Lode at Costerfield at the same time as mining the existing W Lode.
At Cerro Bayo, the current mill design is capable of processing up to 1,600tpd and could therefore process an additional tonnage on top of current production (1,200tpd).
RFC Ambrian said it has tweaked its price target, which is now C¢3 lower at C$1.24, to reflect the first quarter and a reduction in its 2013 gold forecast from US$1,850/oz to US$1,750/oz.
Its investment stance on Mandalay remains ‘buy’.
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