CHICAGO () -- Shares of Anatolia Minerals [TSX:ANO] soared some 20% yesterday after announcing that its flagship Copler development project in remote Turkey. The company's shares had been under pressure since this past summer, as both fallout from Eldorado Gold's [TSX:ELD; AMEX:EGO] legal troubles and a sizeable cost increase in the initial phase of Copler's development served a double whammy to the stock.
But, with yesterday's news that the company has secured approval on its Environmental Impact Assessment (EIA), which is certainly never a given in Turkey, Copler's development and Anatolia's share price may finally be back on track since we first the firm in early fall.
Overview of the Copler Project
As the owner of one of the more sizeable undeveloped gold deposits remaining in the world, Anatolia envisions first extracting the open-pittable oxide portion of Copler over a 10-year time frame, to produce 1.8 million ounces of gold and 2.2 million ounces of silver. The second stage of the project envisions developing its sulfide-reserves, for a potential additional recovery of 2.3 million ounces of gold over a 12-year period. The economics of this portion of the project appear favourable based upon a scoping study just conducted in December 2007.
While the project's economics are still generally seen as quite favourable, Anatolia's shares took a major blow in February when the company announced that its capital cost estimates for development of the oxide reserves had increased some 60% to 80% above the initial feasibility study amount of $125.7 million due to a revised mine plan, escalating costs industry-wide and a declining U.S. dollar. While no formal operating guidance was given at the time, management has also noted that investors should expect an up-tick in operating costs as well in an updated, finalized reserve statement and mine plan to be hopefully released before the end of the second quarter.
With the economics a bit of a moving target, it's difficult to obtain an accurate valuation for Anatolia. But, even with the cost increases, analyst estimates suggest that the shares remain a compelling value. RBC Capital Markets, one of the few larger firms to cover Anatolia, still has a C$6-plus NAV for the firm (almost wholly based on the Copler project) even with the cost increases.
After the pending release of revised project economics and resources, the next crucial steps for Anatolia are to arrange financing (it appears that about $80 million to $100 million in additional funding will be required), and hopefully smoothly begin construction sometime before the end the third quarter.
With an estimated 18-month development timeline, and the EIA now firmly in hand, it appears that Copler could be up and running by early 2010 under the most optimistic scenarios.
Progress on the Corporate Front
The other most significant development that Anatolia's seen is the signing on of a world-class CEO in the form of Ed Dowling, the former CEO of Meridian Gold, who began on the job April 1. While the announcement in late February didn't have a major impact in the market, the attraction of such a heavy-hitting operator as CEO brings the developing company an enormous amount of credibility as it seeks to finance and develop Copler.
Conclusion
With the continued progress on development milestones at Copler, Anatolia's shares at C$4.30 still remain attractively valued, and at a hefty discount to their intrinsic worth. Both for investors and potential acquirers are likely to continue to pay attention to this up and coming junior.
