Many of the truly legendary racehorses, including Secretariat, tended to reserve their greatest potential for one final sprint to the finish. Here in the world of gold mining, one impressive thoroughbred named Dolores may finally be breaking away from the pack.
Since I first highlighted Minefinders
Minefinders reported production and sales results for the first quarter of 2011 this week, revealing solid, silver-heavy production of 37,700 gold-equivalent ounces (GEOs). Capturing the robust price environment with an average realized sales price of $1,387 per gold-equivalent ounce, Minefinders took in a healthy $52.3 million in sales revenue. With operating costs trending favorably below $500 per GEO, my Foolish scorecard shows a speedy expansion in bottom-line results in the works that looks to have some legs.
Dolores suffered a significant injury last year when a tear in the mine's primary leach pad affected operations, until the company could commission a "phase 2" leach pad by September 2010. Remediation work on the damaged leach pad continues, and is set for completion before the end of 2011. Meanwhile, Minefinders anticipates a healthy sprint for a 175% increase in silver production from Dolores (from the phase 2 leach pad alone) to at least 3.3 million ounces. This will be accompanied by 16,500 ounces of gold production for 2011, and Fools can expect the production sprint to continue well into 2012. Silver's expanding strength in price relative to gold also benefits silver-heavy producers like Minefinders and Gammon, and I perceive strong potential for silver to continue leading this precious-metal charge.
Unlike the four-legged variety of thoroughbred, Minefinders' flagship Dolores property is available to investors at bargain prices. With proven and probable reserves of 2.44 million ounces of gold, and a giant silver kicker of 126.6 million ounces, Minefinders sits atop a treasure with a present market value of $8.76 billion. Carrying an enterprise value of just $1.08 billion even after the stock's recent surge, the market values Minefinders more like an elderly horse that's put out to pasture than a colt approaching the prime of its racing career. Following the discovery last year of an exciting new gold deposit (very near the main Dolores deposit) called North Dome, and given the aggressive 50,000-meter exploration program under way for 2011, I believe Minefinders' legs are only growing stronger.
Along with compelling turnaround stories Brigus Gold
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Brigus Gold, Gammon Gold, Minfinders, New Gold, Northgate Minerals, and Yamana Gold. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a triple-crown-winning disclosure policy.