Cluff Gold's chairman and founder, Algy Cluff, has stepped down just as the Africa-focused miner announced its maiden full-year profits. The prior year's pre-tax loss of $1m was transformed into a profit of $25.4m (£16m) on the back of strong revenues at the Kalsaka mine in Burkina Faso. And, while Cluff's shares are down by 19 per cent on our buy advice (102p, 5 August 2011), the outlook is resolutely bullish and is well underpinned by a 46 per cent rise in the resource estimate to 2.1 million ounces at its flagship Baomahun gold project in Sierra Leone.
Though Kalsaka is a mature asset, Cluff managed to produce 71,500 ounces of gold on a modest 4 per cent rise in cash costs. This was ahead of guidance for the second successive year, as ore tonnage rose by 23 per cent to offset the natural decline in the strip ratio, while realised prices rose by 30 per cent to $1,586 an ounce.
In January, Cluff agreed to acquire the nearby Sega prospect, which will extend the life of the operations in Burkina Faso to at least 2015. Cluff raised £23m at 92p a share to fund the Sega deal and expand the exploration programme at its Yaoure project in Cote d'Ivoire. Sega will provide operational cash flows during the construction phase at Baomahun, with first production expected there in 2014.
Casimir Capital forecasts 2012 EPS of 12¢ (9.4¢ in 2011), subject to review post results.
| CLUFF GOLD (CLF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 83p | MARKET VALUE: | £130m | |
| TOUCH: | 82-83p | 12-MONTH HIGH: | 115p | LOW: 63p |
| DIVIDEND YIELD: | nil | PE RATIO: | 14 | |
| NET ASSET VALUE: | 82¢* | NET CASH: | $28.9m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | nil | -4.8 | -7.5 | nil |
| 2008 | nil | -0.9 | -1.1 | nil |
| 2009 | 40 | -35.5 | -30.3 | nil |
| 2010 | 116 | -1.0 | -4.9 | nil |
| 2011 | 122 | 25.4 | 9.4 | nil |
| % change | +5 | - | - | - |
£1 = $1.59 *Includes intangible assets of $68m, or 43¢ a share | ||||
