von Bendigo aufzeigt:
"Bendigo needs big find to pep up shares
BARRY FITZGERALD
December 2, 2009 - 10:03AM
BENDIGO MINING LTD (BDG):
Bendigo Mining must be wondering what it has to do to get some pep into its share price. It seems that the higher the gold price goes and the more it increases its gold production, the more sedately its share price trades.
The stock closed on Monday at 24.5 cents – a level at which it has been banging around for months. By normal gold company valuation metrics, it looks cheap as chips.
Its market capitalisation is $125 million. Knock out its cash of $52 million and you get an enterprise value of $73 million. Gross cash margins on its production are now nudging $A650 an ounce. On forecast 2010 output of 80,000-90,000 ounces, that means it's trading at less than twice its annual cash flow.
But still no action in the share price. There are some good reasons for that too, not the least being the huge disappointment that came when previous management failed on the promise to deliver the Kangaroo Flat mine at Bendigo as a 200,000 ounce-a-year producer.
Kangaroo Flat has since been reconfigured as a steady-state 30,000-40,000 ounce-a-year producer, with production increases from there dependent on success in outlining enough gold-bearing reefs to support higher mining rates.
That's all very well but Kangaroo Flat's real problem from the market's perspective is that because of the nature of its "nuggetty" mineralisation, it struggles to have more than two years of mining reserves ahead of it.
While it could have two years reserves ahead of it for decades to come, the market likes to see 10 year reserves in place before getting too excited about low cash flow multiples. It is the same situation at the group's recent acquisition, the Henty gold mine in Tasmania.
Acquired from Barrick for a knock down price earlier this year, the mine would be closing this Christmas if the reserve position at the time of acquisition was all there was ever going to be at the high-grade operation.
But after just three months ownership and a rejuvenated exploration program, Bendigo has already pushed Henty's reserves out by another six months to mid-2010. And there is good reason to believe that like Bendigo, Henty's reserves will be good for two years on an on-going basis for decades to come.
Bendigo currently ranks inside the top 10 of ASX-listed gold producers thanks to its ownership of Kangaroo Flat and Henty. But to get the market rating that the others inside the top 10 enjoy it will need to make a big discovery at one of the operations, one that gives it a 5-10 year reserves profile. Henty and its surrounding tenements having the best potential to excite.
Failing that, another acquisition could be required. Concerns that Bendigo could be interested in the failed
Ballarat project that Lihir has up for sale has been a factor in the market holding back on a re-rating of the stock. The message has been buy something else by all means, but not Ballarat.
On that score, Bendigo could do itself a favour by formally ruling itself out as buyer of Ballarat.
Either way, we don't have to wait long, with Lihir saying it plans to offload the money consuming monster by the end of the year.
bfitzgerald@theage.com.au
The Age"
http://www.smh.com.au/business/...to-pep-up-shares-20091202-k4ku.html -----------
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