What follows is an exerpt from Canaccord Wealth Management’s Morning Coffee newsletter.
Ore production from Atna Resources Ltd.’s (TSX: T.ATN, Stock Forum) Pinson mine is expected to commence in December (shipments to begin in January). The market will be looking for progress on underground development and expectations for the next several months, which should provide better confidence on potential production/cash flow in 2013.
A Bay Street analyst commented that in general, the fact that the processing will be done offsite (Newmont Mining Corp.’s (NYSE: NEM, Stock Forum) Twin Creeks for the oxide ore and Barrick Gold Corp.'s (TSX: T.ABX, Stock Forum) (NYSE: ABX, Stock Forum) Goldstrike for the sulphide ore) makes Pinson a lot easier and by allowing the team to focus attention on the underground mining ramp-up.
The analyst also expects that during the company’s upcoming site visit, the company may also have an update on permitting – both the expanded Nevada Water Pollution and Control Permit expected by year end/early 2013 (400,000 tpy vs current 36,500 tpy) and also more information on the Pinson open pit (which is longer term). At Briggs, the focus will likely be on crusher performance following the recently completed repairs which enabled a 58% increase in crushed tonnage stacked in Q3/12 (vs Q2/12).
Briggs will continue to be a key contributor to production and cash flow in 2013. The analyst adds that the next few quarters are critical for the company – successful execution on the Pinson underground start-up and continued strong performance from Briggs could set the stock up for serious re-rating in 2013.
The stock trades at 0.47x P/NAV and 2.3x P/CF (213) vs the junior producer average of 0.68x and 7.9x respectively, the variance highlighting re-rating potential on successful execution at Pinson.
Atna shares were unchanged Monday at $1.16, leaving the company with a market cap of 162.9 million, based on 140.5 million shares outstanding. The 52-week range is $1.54 and 76 cents.