Quadra Mining closes up five per cent after record copper and gold production
Quadra Mining Ltd. (TSX:QUA) said Monday it produced a record amount of copper and gold at its Robinson mine in Nevada in the first quarter, with copper production up 30 per cent and gold up 150 per cent from a year ago.
The news helped send the stock up 55 cents to $11.90 on the Toronto Stock Exchange.
The Vancouver-based miner said Robinson produced 36.6 million pounds of copper in the first-quarter of 2007 and 31,040 ounces of gold.
“We have been able to reap the benefits of continuing high mill throughput and improved recoveries,” Quadra president Paul Blythe said in a statement.
“Robinson, as a skarn deposit, is difficult and results are likely to be erratic in any month or quarter. Nevertheless, clearly we are making good progress in getting in front of these complexities.”
Gold production has already exceeded half of Quadra’s guidance for annual gold production, Blythe said due to higher head grades than estimated in the block model and higher-than-historical recoveries.
“As we gain confidence on sustainability, we will revisit our expectations,” the chief executive said.
Quadra expects to release first-quarter financial reports on April 23. The average analyst estimate is for earnings of 66 cents per share for the quarter according to Thomson Financial.
In 2006, Quadra earned $32.2 million or 87 cents per diluted share on revenue of $393.3 million. That compared with a loss of $2 million or seven cents per diluted share on revenue of $228.2 million in 2005.
RBC Capital Markets analyst Fraser Phillips has rated the stock a “sector perform” with “speculative risk” and a $10.50 price target.
He wrote that Quadra provides investors with high leverage to copper prices in a junior producer, but has faced inconsistent ore grades and recoveries at Robinson and delays and cost escalation at its Carlota project could present challenges going forward.
“The high-cost nature of the assets would lead to a rapid deterioration in value in any significant copper price correction,” Phillips noted.
Last month, Quadra made a friendly offer of $34.5 million in stock for International Molybdenum PLC, which owns the high-grade Malmjberg molybdenum project in Greenland.
The takeover proposal is based on InterMoly shareholders receiving one Quadra share for each 36.22 InterMoly shares and InterMoly warrant-holders getting one Quadra share for each 99.23 InterMoly warrants.
Quadra has said Galahad Gold PLC, with 78 per cent of InterMoly’s shares and 25 per cent of its warrants, plans to tender to the offer. In addition, InterMoly’s board of directors is endorsing the takeover bid.
In addition to a measured and indicated resource containing 560 million pounds of molybdenum, a technical report prepared for InterMoly identifies the development of an open-pit mine that would operate 365 days per year at a scale of 25,000 tonnes per day mill feed.
Information from: www.canadianbusiness.com
