YNG: Shining bright
The YNG investment has been exception from the start. The shares have been on a tear recently and it will only get better as the cash starts flowing in.
YNG reported its Q2 results recently. The results were mostly a no event except for two important milestones. For any company that is going through a turnaround one of the most important things to looks for is what management has promised and how well they are able to deliver. The Q2 highlights:
- The company had production of 18K for the quarter. This is the highest level of production in two year. The company is currently producing 25,500, so Q3 numbers will be substantially higher on production, revenue, and cash flow basis. So I’m looking for exceptionally strong Q3 and Q4 (we should be producing around 37,500 for the quarter) for the company.
- The company closed on the $25M funding. Management will be looking to reinvest the funds for faster reopening of other mines. Although there will be some dilution, I think the ability for management to ramp up production will lead to strong return for shareholders.
Management had mentioned they wanted to hit 150K production in early July 2010. So far the have hit 102K and they have made modifications that should get the company to hit the 150K soon, if the company isn’t already producing at that level. Also, the funding will allow the management team to hit the goal of 400K ounces of production by 2012.
Today the company announced some exceptionally good news related to additional drilling in the Ketza river property.
This morning Yukon-Nevada Gold reported a number of encouraging assays, including 2.42 meters averaging 20.8 grams per tonne gold from 17 meters in drill hole KR-10-1471, 3.24 meters averaging 12.2 grams per tonne gold from just 4.45 meters in drill hole KR-10-1473 and 2.15 meters averaging 9.9 grams per tonne gold from 19.95 meters in KR-10-1474.
All three holes were drilled into the Bluff Zone which is located west of the Peel Zone and east of the Lab-Calcite Zone – both of which the company is planning to develop open pits. Cleary the potential to add additional ounces at shallow depths close to two proposed pits is a very attractive proposition for Yukon-Nevada Gold.
The recent drilling will also undoubtedly bolster the size of the resource at Ketza, where the company has already defined open pit (applying 1 gram per tonne cut-off) measured and indicated resource of 3.7 million tonnes averaging 4.9 grams per tonne gold (approximately 585,000 ounces of gold) with a further small resources in the inferred category. The resource at Ketza was last updated in December 2007.
“These recent encouraging drill intercepts in the Bluff Zone will be used by mine engineers to help determine if an additional open pit is warranted in the area,” Yukon-Nevada Gold noted.
The Ketza River Property includes the Ketza River mine which produced circa 100,000 troy oz of gold from 340,000 tons of ore between 1987 and 1990.
Again, you want to judge management on its ability to execute. For the company to hit the 400K of production, the company needs to expand rapidly. The results from the Ketza River property will allow the company to increase production quickly.
YNG has been an exceptionally sweet ride. In less than a month, we are up over 85%. And there is plenty more on the upside to come. YNG is shining bright in our portfolio.