By Dan Stratful
Wednesday 2nd May 2012
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Phoenix Gold (ASX: PXG) is a gold explorer with an interest in 251 tenements covering an area of 452m2 around the Eastern Goldfields of Western Australia, and within a 60 kilometre radius northwest of well-know gold region Kalgoorlie.
PXG listed on the ASX in December 2010 and has since increased its total resources by over 70% to 1.7 million ounces of gold. It’s Castle Hill Project has emerged as a major exploration centre for the company. PXG reportedly has a management team with good credentials and a successful track record of mine finding, mine development and mine operation.
Research reports on PXG are available which value PXG’s shares at between 55c – 60c each, based on the Enterprise Value to Resource ounce of gold valuation method.
PXG is targeting an increase in its gold Resources to 2.5 million ounces of gold by the end of 2012 which should result in some gold reserves.
Junior gold explorers who successfully find gold, quickly find themselves a takeover target after they move into production phase, and there is plenty of M&A activity within the gold sector as recently seen with Norton Gold Fields, which has received a takeover offer. The Kalgoolrie region of WA has a rich history of gold mining and it is a highly prospective region for gold exploration.
PXG currently has around $8 million in cash which will fund exploration activities over the next 12-18 months, while it also carries no debt. It has entered memorandum of understandings’ with processing plants for the monetisation of some of its non-core gold deposits in 2012, and this would provide extra capital.
An investment in PXG should be treated as speculative.
Status: SPECULATIVE BUY
PXG’s shares today traded at 19c
For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, firstname.lastname@example.org
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