Wednesday news feat. Teranga Gold, Cameco, and GoldQuest Mining

POSTED ON April 29, 2015 BY James Fraser
CATEGORY Cameco, Goldquest Mining, Stories, Teranga Gold,

The Sabodala mine is expected to produce between 190,000 and 210,000 ounces of gold in 2013. Courtesy of Teranga Gold

Teranga operations in Senegal (Image: Teranga)

As the markets await the FOMC statement later today here are my top mining headlines of the day.

Teranga Gold - (TGZ:TSX) - Teranga had a very solid first quarter earning a net profit of $15.27 million. Gold production came in at 48,643 ounces leading to a profit of 4 cents per share. Not bad at all for a company trading at 71 cents early this morning. All in sustaining costs are reported at an impressive $841 per ounce sold.

"We are off to a solid start to the year, reflecting Company-wide focus on increasing productivity and reducing costs," stated Richard Young, President and Chief Executive Officer of Teranga. "On the growth side, the development of our new high-grade Gora deposit is progressing well and is scheduled to be in production by the fourth quarter. On increasing processing capacity, the mill optimization project, which is expected to increase throughput by up to 10 percent and also lower unit costs by approximately 5 percent, is targeted for completion in the third quarter of 2016 and we continue to see positive results on the phase two testing of heap leaching. These organic growth initiatives, together with the high potential to convert resources to reserves and make discoveries on our large land package, are expected to lead to long-term growth in free cash flow."

I was on the conference call this morning to hear the latest on Teranga.

Net profit tripled year over year;
Free cash flow was $131 per ounce;
Teranga is now debt free (end of March) with a strong balance sheet.

Teranga remains focused on optimizing operations and generating free cash flow for investors. Ore delivery from the high grade Gora deposit is expected in the fourth quarter. Gold production is expected to be significantly higher in Q4 when Gora comes on line.

I like what I see when it comes to Teranga an the company is on my watch list for junior gold producers.

Read: Productivity Improvements and Favourable Cost Conditions Underpin Teranga Gold's Solid First Quarter 2015 Financial Results

Cameco - (CCO:TSX) - Cameco is out with first quarter results showing a net loss of $9 million. Cameco is the bell weather stock in the uranium industry and I always like to follow the quarterly results to get an update on the uranium market.

The net loss was primarily due to higher mark-to-market losses on foreign exchange derivatives. Adjusted earnings were $69 million ($0.18 per share diluted).

"We have continued to perform well in an uncertain market," said president and CEO, Tim Gitzel.

"We have not only achieved success at the operational level, with excellent progress at Cigar Lake, and permission for a higher production level at McArthur River, but our company as a whole has focused on remaining a market leader, by maintaining strong relationships with our customers, and forging new relationships, as Cameco Inc. did by signing a long-term supply agreement with India. Our strengths have always been great people, great assets, and a strong portfolio of contracts, and we continue to build on those strengths, even in a depressed market."

Uranium stocks have caught a bid recently with the announcement of two Japanese reactors likely starting this summer. I personally would be a seller into this rallies especially on some of the bigger (%) moves. Long term fundamentals look strong but short term I am in no rush to buy uranium equities.

As far as Cameco operations go Cigar Lake continues to ramp up producing 1.9 million pounds in quarter and is expected to produce between 6 and 8 million pounds this year. Cigar Lake is expected to ramp up to 18 million pounds by 2018.

Cameco remains well positioned to capitalize on the next uranium bull market. Over hanging the stock is a dispute with the CRA regarding taxes owed.

Read: Cameco Reports First Quarter Financial Results

GoldQuest Mining - (GQC:TSXV) - GoldQuest has released an updated PEA for the Romero project in the Dominican Republic. The revised PEA shows excellent economics with a 34% IRR after tax at $1225 gold. Pre production capital is estimated at only $143.1 million.

The IRR is 19% higher than the original PEA as JDS focuses in on mining the high grade matieral.

The stock has doubled in the last week on today's news and anticipation after Eric Coffin published an article on Goldquest earlier this week.

"JDS has designed a high grade underground mine plan averaging 5.39 g/t AuEq, resulting in after-tax NPV of $219 million using a 6% discount rate. We are fortunate that the geometry and metallurgy of the Romero deposit lend the project to being scalable and that we can pursue this higher grade option with simplified processing for Romero, our cornerstone asset in the Dominican Republic," concluded Chief Executive Officer, Julio Espaillat. "This revised PEA, with a gross margin of $653/oz AuEq, places Romero firmly in the lowest cost quartile of the industry and demonstrates that the economics of Romero are extremely compelling."

GoldQuest is last at 17.5 cents giving the company a market cap of ~$25.5 million. I remember a few years ago when GCQ stock was a huge success going from 6 cents to over $2 in a quick period of time based off initial drill results at Romero.

Latest financials show GoldQuest had $5.6 million in cash at the end of 2014. This is likely lower now but still should be pretty healthy.

It will be interesting to see if GoldQuest can gain more traction and secure financing in this weak mining market.

Read: GoldQuest Releases Highlights of Revised PEA for Romero Gold-Copper Project

See you in CEO Live where members are discussing the latest mining and business news daily.

This is not investment advice. All facts are to be checked and verified by reader. As always please do your own due diligence.

James Fraser

Mr. Fraser joined CEO.ca in October 2014. He is passionate about the mining industry. His passion led to co-authoring the e-book "Mining Stocks Investor Guide: A Guide to Investing in Mining Companies." He has a finance background and has completed his Canadian Securities Course (CSC) and Conduct and Practices Handbook (CPH). When Fraser is not "digging" up the latest mining stock, he can be found enjoying a wide variety of sports or travelling the world. More →

Twitter: @miningstocks

james@miningstocksguide.com

James Fraser

Twitter: @miningstocks

james@miningstocksguide.com

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