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Cantor Fitzgerald - Pershing Gold Corp

Cantor Fitzgerald - Pershing Gold Corp

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Published by CanadianValue
Cantor Fitzgerald - Pershing Gold Corp
Cantor Fitzgerald - Pershing Gold Corp

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Published by: CanadianValue on Jul 02, 2014
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May 28, 2014 Initiating Coverage
Rob Chang, MBA Associate: Michael Wichterle, MBA
rchang@cantor.com mwichterle@cantor.com (416) 849-5008 (416) 849-5005
 — Toronto:
(416) 363-5757, (866) 442-4485
See disclosure and a description of our recommendation structure at the end of this report.
Company profile:
 Pershing Gold is a near term gold producer with assets in Nevada. Pershing has a fully operational and permitted processing facility along with a consolidated land position of over 25,000 acres.
   E  q  u   i  t  y   R  e  s  e  a  r  c   h
Near-term gold producer with a turn-key facility and pedigreed management
Pershing Gold Corp is a near-term, Nevada-based gold development company with pedigreed management that will soon re-start production at the Relief Canyon Mine.
 We are initiating coverage on Pershing Gold Corp.  with a Buy recommendation and a $0.55/share target price. Our target price reflects a 1.0× multiple to our $0.54 per share NAV valuation.
Relief Canyon mine –
Pershing’s Relief Canyon Mine is located in a known gold and silver trend in North-central Nevada. The mine itself has previously been in production (131,000 oz gold, 111,000 oz silver) in the late eighties.
Blue sky potential – 
 Pershing controls a total consolidated land position of 25,000 acres located adjacent to established mines. Of  which less than 10% has been explored to date.
Permitted processing facility
 – As a key asset, Pershing Gold has a fully permitted processing plant with a capacity to treat 8M tons per year. Moreover, the permitted leach pad has a 21M ton capacity. The facility itself is ideally positioned to process future discoveries from satellite deposits.
Permits & production –
 The company is on track to be fully permitted by 2015. We anticipate production to begin in 2016.
Pedigreed Management
Chairman and CEO Stephen Alfers was the former Chief of U.S. Operations at Franco-Nevada and has developed several notable gold projects including Long Canyon, Sandman, and Northumberland.
Recommendation: BUY
Symbol/Exchange: PGLC/OTCQB Sector: Metals & Mining
 All dollar values in USD$ unless otherwise noted.
Current price: $0.35 One-year target: $0.55 Return target: 57% Cash on hand $5.5M
Financial summary
Shares O/S (M)280.3 52-week range$0.34 - 0.41Market cap ($M)$98.1Avg. weekly vol. (000)2,898Market float ($M)$95.0Fiscal year-end31-Dec
Measured & IndicatedTons (K)Au (g/t)Au (Koz)
Total26,9470.6552.0InferredTons (K)Au (g/t)Au (Koz)
(0.156g/t Oxide & 0.633g/t Sulfide cut-off)
Source: Company Reports and Cantor Fitzgerald
Pershing Gold Corp. May 28, 2014 Rob Chang, MBA, (416) 849-5008 2 of 18
 We are initiating coverage of Pershing Gold Corp. (“PGLC”) with a Buy recommendation and a $0.55/share target price. With Pershing Gold, we see an excellent combination of a quality exploration project given the status as a past producing mine, a proven management team, a nearly-new processing facility, and a quick timeframe to production. Our target price of $0.55 implies upside of 57% from last close. Since its trading began nearly three years ago, Pershing Gold has grown via exploration and acquisition.  This is demonstrated by the resource growth at its Relief Canyon Project, beginning with 155,000 oz as of a June 2010 NI43-101  Technical Report which subsequently grew to 564,000 oz by January 2013. Presently, given the newest Technical Report which was published in March 2014, the global gold resource stands at 717,000 oz. Given that most permits are already in-hand, we forecast a quick re-start in production by 2016, (nearly 85,000 ounces). While Pershing has not released a preliminary economic analysis, based on Nevada-peer performance data, we estimate Pershing to produce at an all-in sustaining cash cost of $743.50.
Exhibit 1. Share price performance & gold resource growth
Source: Cantor Fitzgerald Canada
$0.00$0.10$0.20$0.30$0.40$0.50$0.60$0.70$0.80$0.90$1.003󰀭󰁏󰁣󰁴󰀭11 3󰀭󰁏󰁣󰁴󰀭12 3󰀭󰁏󰁣󰁴󰀭13
󰁓󰁥󰁰󰁴 2011: G󰁬󰁯󰁢󰁡󰁬 A󰁵 󰁒󰁥󰁳󰁯󰁵󰁲󰁣󰁥:155,000 󰁯󰁺J󰁡󰁮󰁵󰁡󰁲󰁹 2013: G󰁬󰁯󰁢󰁡󰁬 A󰁵 󰁒󰁥󰁳󰁯󰁵󰁲󰁣󰁥:564,000 󰁯󰁺M󰁡󰁲󰁣󰁨 2014: G󰁬󰁯󰁢󰁡󰁬 A󰁵 󰁒󰁥󰁳󰁯󰁵󰁲󰁣󰁥:717,000 󰁯󰁺
Pershing Gold Corp. May 28, 2014 Rob Chang, MBA, (416) 849-5008 3 of 18
Exhibit 2. Key asset location
Source: Pershing Gold Corp.
Past producing mine
 The Relief Canyon Mine has a history of production in which 131,000 oz of gold along with 111,000 oz of silver have been mined in the late eighties.
Rapid resource growth 
 Since June 2010, a global resource of 155,000 oz has grown by 363% to reach 717,000 oz as of March 2014. The estimated 2014 drilling budget for Relief Canyon will total $1.5M and encompass between 7,000-8,000 meters. 
Exploration upside –
Of the over 25,000 acres of claims, less than 10% has been explored. In fact, the deposit itself at Relief Canyon is only about 50%-60% explored according to management. We note that operations are in a known gold & silver trend which since 2011 has had nearly $7M in exploration drilling. The Relief Canyon mine is located 6 miles south of Coeur Mining’s (CDE-NYSE, CDM-TSX; Not Rated) Rochester Mine that is expected to produce 28,000 – 31,000 oz. of gold and 4.1 – 4.4M oz. of silver in 2014 as well as two other operations within 15 miles distance.
Fully permitted processing facility –
Currently on care & maintenance, the processing facility is expected to be re-commissioned along with all necessary ancillary support facilities on the Relief Canyon mine site. The processing plant has a capacity to treat 8M tons per year. Moreover, the permitted leach pad has a 21M ton capacity. The plant is relatively new, having been built in 2008. The re-commissioning is expected for the first half of 2015.
Excellent management pedigree –
Chairman and CEO Stephen Alfers was the founder and CEO of NewWest Gold Corporation from 2002-2007, where he led the development of several notable gold projects including Long Canyon, Sandman, and Northumberland, all projects now owned and being developed by Newmont. Alfers was a senior executive at Franco-Nevada

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