01.08
Centerra Gold Inc. (CG) – $11.08 – Target Increased to C$17 with Revised Mine Plan and New Underground Scenario Outperform, Speculative Risk, Price Target: $17.00 (prev. $11.00)
RBC CM has modelled a high-grade underground scenario at Kumtor and incorporated Centerra’s revised Kumtor open-pit mine plan and reserve-resource update, which was released just prior to its research restriction. Centerra has guided for 2010 production of 660k to 680k oz versus RBC CM’ new estimate of 658k oz, which has been lowered from 760k oz, and RBC CM is lowering its cost estimates from $480/oz to $468/oz. The new Kumtor Underground Scenario has been added to its model. Given increased confidence in the conversion of Inferred resources to reserves, RBC CM now models high-grade ore mined from underground starting in 2013, with a 50/50 mix from open-pit at an average grade of 2.2 g Au/t and underground at 12 g Au/t. With Kumtor Underground considered a key value driver, RBC CM has increased its price target to C$17/sh.
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