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Timmins Gold - Growing Gold Producer - Lots Of Upside

|Includes:Timmins Gold Corp (TGD)

Timmins Gold TGD is well positioned for continuous growth as a gold production and development company. The Company owns and operates the San Francisco Gold Mine in Sonora State, an open pit heap leach operation from which Timmins Gold is expanding production to 125,000 - 130,000 ounces of gold in 2013.

On the exploration front, Timmins Gold has over 200,000 hectares of claims contiguous to its mine along the highly prolific Northern Sonora Gold District. Exploration success around the mine has significantly increased gold resources and reserves. The Company is committed to an extensive 200,000 meter program in 2013 for further resource and reserve growth.

Source: www.timminsgold.com

Valuation

Source: TD Securities

Our own discounted cash-flow valuation (DCF) puts Timmins Gold's net asset value as follows:

NAV: CAD 3.60

P/NAV: 0.68x

The current share price does not reflect the company's future cash-flow from production, nor does it value its current gold resources adequately. Current market capitalization of Timmins Gold prices their entire (unadjusted) gold resources at only $115 / ounce.

We therefore see Timmins Gold at the current price levels of CAD 2.28 as a buying opportunity.

Fundamental Considerations

ESTIMATED PRODUCTION FOR 2013 OF 125'000 OUNCES OF GOLD SHOULD LEAD TO A SIGNIFICANT RERATING OF THE COMPANY, ONCE THE MARKET RECOVERS FROM ITS PRESENTLY OVERSOLD CONDITION.

IMPORTANT FACTS THAT SPEAK FOR TIMMINS GOLD ARE:

· POSITIVE CASH FLOW GENERATED IN 2012 AND GOING ONWARD

· EXPANSION OF PRODUCTION IN 2013 AND 2014

· PROMISING EXPLORATION RESULTS

· CASH COSTS OF $750 / OZ. ARE AT THE LOWER END

IN REGARDS TO OCF AND GOLD OUNCES IN THE GROUND TIMMINS GOLD IS VALUED WITH A DISCOUNT TO OTHER PRODUCING MINES IN MEXICO AND SOUTH AMERICA.

My entire report can be downloaded following this link: http://pzim.ch/file_uploads/reports/25_0_tmm1.pdf

Disclosure: I am long TGD.

Stocks: TGD