Research: Norton Goldfields Limited (NGF)

Norton Goldfields Limited (NGF $0.25) – Leveraged production with growth upside

Initiating Coverage with a BUY recommendation and $0.45/share price target

Key points

• NGF offers excellent leverage to Australian Dollar gold prices through its 100% owned Paddington Gold Mine in Western Australia.
• Paddington is currently producing around 130kozpa from low grade open pits at a total cash cost around A$800/oz.
• The company is planning to add high grade underground ore in late 2009 which will lift gold production to nearly 200kozpa at similar cash costs.
• We are initiating coverage on NGF with a BUY recommendation and set a $0.45/share price target.
• Aside from movements in the gold price, key catalysts for NGF’s share price include the release of an updated life of mine plan in August and the commencement of ore supply from underground mining in late 2009.

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