Vancouver, British Columbia, June 26, 2013 - Investment firm Canaccord Genuity has initiated coverage on Golden Queen Mines (TSX: GQM) (OTCQX:GQMNF). Analyst Joe Mazumdar gives the company a speculative buy rating and one-year price target of $1.65, a 41% premium to the $1.17 price the day the report was issued.
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Golden Queen, a developing stage mining company, is advancing its 100% owned, Soledad Mountain gold silver heap leach project in southern California. The project will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore. Canaccord's valuation is based principally on this fully permitted project.
The mineable reserve estimate of 1.25 million ounces grading 0.65 grams per tonne gold was not the most economic pit design as it was constrained by the current state regulations and only converted about 40% of the measured and indicated resource envelope. However, the company's ability to expand the permit boundary later in the mine life coincident with a buoyant market for its potential aggregate supply could increase the resource conversion.
Analyst Joe Mazumdar stated, "We have forecast an average production profile of approximately 70,000 ounces per year of gold at an average C2 cash cost, including by-product silver credits and a 4% NSR, of US$455 to 460 per ounce over a 14-year mine life."
Canaccord estimates an initial capex of US$140 - $145 million, and that the project should generate an internal rate of return of just under 30% and a 3 and a half year payback, applying spot gold and silver prices.
The shares are currently trading at $1.00, well below Canaccord Genuity's target price of $1.65, and with 98 million shares outstanding, the company is capitalized at $98 million.
For more information, please visit the company's website www.goldenqueen.com or contact Lutz Klingmann, President at 604-921-7570 or email email@example.com (mailto:firstname.lastname@example.org).
For more information about Canaccord Genuity or to obtain a copy of their research report, contact your nearest Canaccord Genuity office. Their branches are listed on their website at www.canaccord.com (http://www.canaccord.com/).
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