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Monday, 26 August 2013
Event Driven Trading Opportunity in Sacre Coeur Minerals as GLD Heats Up?
Shareholders in Sacre-Coeur Minerals (TSX-V:SCM) are looking ahead to the company's highly anticipated feasibility study, which is due out in September, and could coincide nicely with gold's recent form; bullion for December delivery briefly topped $1400 per ounce Monday after more than a week of steady rises. The SPDR Gold Trust (NYSEARCA:GLD) also rose again Monday, having already surged almost 10 per cent in the month of August on the back of turmoil in Egypt and Syria.
The rising fortunes of the yellow metal makes for good news for investors with their attention on the miner, which has already caught the interest of high-quality investors, such as Russia’s third largest gold company, Nord Gold, (LSE:NORD) which holds 10 per cent of shares.
The company has been tipped as one to watch by industry observers, with research released as recently as last month forecasting the stock to hit 64 cents.
Prime Equity Research in a note released in July assigned a speculative buy rating in its first report on the company saying Sacre-Coeur was “underappreciated by the market”
Writing in the note, the analyst, Vitalie Eremia, opined that using the term "junior" to describe Sacre-Coeur was “a bit of a misnomer” in that the company’s alluvial operation in Guyana already gives rise to "some low-cost gold", meaning the company already produces with annual proceeds in the millions of dollars.
Eremia went on the say that “the company is quite good at ‘hiding’ this, booking these proceeds as offsets to exploration costs. Perhaps this is one reason why it appears underappreciated by the market – it’s not obvious that the company has cash inflows and appears to be an average junior.”
Simultaneously, Sacre Coeur is developing its Million Mountain Zone 1 resource body in Guyana where it has already reported results from metallurgical test holes that were encouraging in terms of grades. The holes, which yielded in particular 42.8 metres grading 10.56 g/t gold, were drilled to collect samples as part of the feasibility study that is currently underway for the project.
The results of Sacre Coeur’s internal analysis of the results prompted the gold exploration and development company to move directly to a formal feasibility study, now being carried out and expected in the third quarter. The report will be followed immediately by a final development decision, and should the study turn up a positive result, the completion of development financing and commencement of construction, with commissioning of the mine and plant for production targeted for the third quarter of next year.