Casimir Capital on Wednesday reiterated its speculative buy rating and $8.50 target price on Guyana Goldfields (TSE:GUY), after the company announced the resignation of its president and COO, Marcel DeGuire.
Guyana late Tuesday said that DeGuire was leaving the company for personal reasons and noted that a search for his replacement is underway. It also noted that the development program at its flagship Aurora gold project in Guyana has not been affected by DeGuire’s resignation.
“And we would not expect it to do so, given the continued employment of St. John Lees, VP of projects, who was hired in May 2012 to directly manage the mine’s construction and development,” Casimir analyst Stuart McDougall said in a Wednesday research note.
“However, we are surprised by the update, given that Mr. DeGuire only assumed the role in September and that his resignation marks the second departure from the president and COO role in less than one year.”
Casimir said that while DeGuire’s departure is “certainly a corporate setback”, it does not expect it to have a negative effect on the Aurora’s project’s advancement.
The equities research firm first raised its price target on Guyana Goldfields in January, after the gold company released a long-awaited feasibility study update for the Aurora project.
The Tetra Tech Inc.-led study estimated the after-tax internal rate of return (IRR) at 38% and the net present value, at a 5% discount rate, at $800 million, assuming a base-case gold price of $1,300 per ounce.
McDougall said the results marked a "significant improvement" over the feasibility study last February, which estimated a base-case after-tax IRR of 12.7%.
The latest report also saw a 19% decrease in life-of-mine average cash costs, reflecting a tighter mine site, a 49% reduction in the stripping ratio, and a 49% decline in underground unit costs.
Life-of-mine average recovery rates were basically unchanged, but processing unit costs fell almost 19% on lower power consumption rates. The company also increased its peak processing rates by 25%, helping to keep life-of-mine production rates within 2% of the original feasibility study - at 194,000 ounces per year.
Shares of Guyana Goldfields fell more than 11% as at about 2 p.m. EDT, trading at $2.56.
Reported by Proactive Investors 9 hours ago.