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The Gold Stock Strategist analyzes leading junior gold producers and major gold mining companies.

Comments are welcomed!

Wednesday, March 19, 2008

Minefinders

CURRENT PRICE: $12.48
TARGET PRICE RANGE: $17.88 to $21.32

Minefinders Corp. is a precious metals mining and exploration company. The company is in the final stages of building the multi-million ounce Dolores gold and silver mine in Mexico. The mine is expected to have a 15-year life open pit mine with additional potential as a high-grade underground mine in the future.

Mining operations at Dolores commenced during the fourth quarter of 2007, with full commercial production expected in the second quarter of 2008. They expect their first pour in Q1 of 2008. Minefinders also has a pipeline of three additional advanced exploration projects in Mexico.

The common shares of Minefinders are listed on the Toronto Stock Exchange under the symbol MFL and the American Stock Exchange under the symbol MFN.

MINEFINDERS SUMMARY

TSX: MFL

AMEX: MFN

Shares Outstanding: 49.0 Million (60.4 million fully diluted)

Market Capitalization: ~$600 million

Telephone: (604) 687-6263

Minefinders Web Site

Presentation

Minefinders Mining has a portfolio of properties with over 3.25 Million oz of gold resources and 155 million ounces of silver( NI 43-101).This is about 4.6 Million oz. of gold equivalent resource.

Minefinders owns four properties in Mexico (Dolores, Real Viejo, Planches de Playa). Dolores is the crown jewel with 2.45 million ounces of measured and indicated gold resources and 129 million silver resources),

Production is projected to be 70,000 oz. in 2008; 120,000 oz. in 2009; 120,000 oz. in 2010.

Minefinders production is not hedged.

Minefinders has ~$48 million in debt.

Cash currently available as of February 2008 = ~$26 million in working capital, plus a $50 million revolving credit facility.

The following methods are what I use to value Minefinders for my investment purposes and provide a range of short-run and potential long-run value.

SHORT-RUN CASH FLOW SHARE VALUE

$17.88 per share in 2009 (2009 reflects Minefinder’s full-year production profile relative to 2008) using a cash flow model valuation and assuming the following:

10x cash flow
NEGATIVE per ounce production cost (due to silver credits)
120,000 ounces of production in 2009 (~70,000 oz. projected in 2008)
$2 million G&A
$10 million capital expenditures
60,400,000 shares outstanding (fully diluted)

POTENTIAL LONG-RUN RESERVE SHARE VALUE

$21.32 per share based on current resource base.. The majors are paying about $280 an ounce for buyouts at $950 an ounce POG. Minefinders currently has about 4.6 million ounces (gold equivalent) times $280 an ounce equals $1,288 million. $1,288 million divided by 60.4 million shares equals $21.32 per share.

DIRECTORS
Mark H Bailey, Director, President and CEO
Robert Leclerc, Q.C., Chairman of the Board of Directors
James M. Dawson, P.Eng., Director
H. Leo King, P.Geo., Director
Tony Luteijn, B.Sc.; M. Eng., Director

MANAGEMENT
Mark H Bailey, Director, President and CEO
Tench C. Page M.Sc., Vice President, Exploration
Greg Smith, CA, Chief Financial Officer
Gregg Bush, B.Sc., Vice President, Operations

-------------------------------------------------------------

Full disclosure: I own shares in Minefinders. The information provided in this post is believed to be correct, but not guaranteed. Investing in junior gold miners entails risks. Readers are responsible for their investment decisions. Do your own due diligence

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