www.excoresources.com.au
Exco Resources Ltd has a clear development strategy for its highly prospective project portfolio. The portfolio currently includes the White Dam Gold Project in South Australia and the Cloncurry Copper Project in NW Queensland.
Exco Resources BUY recommendation from Fox Davies
White Dam update
Recommendation:
Fox-Davies retains a BUY recommendation with an unchanged target price of A$0.88 per share.
Exco Resources (ASX: EXS) last traded at $0.59, with the recommendation providing a potential 49% upside.
Event:
Exco Resources (ASX: EXS) has released its interim results for the first half of fiscal 2011 and also released the production figures for White Dam along with a resource upgrade.
These releases also coincided with a site visit to White Dam by Fox Davies personnel.
The interim profit was A$10.4M, very much in line with expectations given the quarterly production figures and cash flow statements that the company releases every quarter.
However, gold production at White Dam for the period January and February, at 19,378oz well exceeded our expectations.
Comment:
The current quarter should be exceptionally good for Exco’s 75% owned White Dam mine.
With the gold loan now fully repaid, the mine should be receiving the spot gold price.
Combine this with production that is expected to be well above the 22.84k oz produced in the December quarter should see cash costs decline below the $246/oz recorded in the December quarter.
Regarding the presumed excellent March quarter, we certainly saw nothing to suggest that the excellent production achieved in the first two months of the quarter was an aberration.
It should see the cash on hand grow well in excess of the A$13.67M on the balance sheet at the end of December.
The result of this is that Exco will be able to continue its aggressive exploration programme in north-western Queensland and fund it all from cash flow.
These results, plus the expected developments at the Cloncurry Copper project put Exco in a very strong position.



















