The company's potential as a near term, potentially very low cost gold producer has earned it this merit.
The following is an extract from the report.
Quick cash for Kyrgyz gold
Near term, high margin gold producer
MSR has received a Mining Licence for its proposed Shambesai Gold Mine in the Kyrgyz Republic.
Low cost gold production (245koz Au over 4.5 years) is expected to start in 2014 subject to funding a modest CAPEX spend of $33m.
Low cost gold: Shambesai could produce +245koz Au at average OPEX $411/oz and CAPEX US$32.6m from 2014 (peak production ~67.5kozpa).
Strong cash flow: net cash post-payback US$107m at US$1100/oz LT; this increases to US$151m at US$1600/oz Au.
High exploration potential: owns 3,500km2 of the Tien Shan gold belt (17Moz Kumtor, +100Moz Au Muruntau) largely untested.
Experienced management: shares several Board members with Papillon, Sandfire and Perseus (spun out of PRU in 2008). MD has strong in-country experience.
High quality register: implies due diligence, support on market - includes Perseus, Lion Group, Macquarie Bank.
Favourable jurisdiction: Political changes (and work by MSR) mean Kyrgyzstan is a viable place to mine gold.
Investment view: Buy (Speculative), TP $0.25/sh
We like MSR because it's a near-term, potentially very low cost gold producer that could bank +US$100m over 5 years, even at US$1100/oz gold from 2016.
We expect some of this short, sharp injection of cash to find its way into exploration of MSR's large and highly prospective tenement package in south-western Kyrgyzstan.
Price catalysts for 2013 could include final permitting, funding and start of construction at Shambesai. Further exploration success is a good possibility.
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