TORONTO (miningweekly.com) – Shares in St Andrews Goldfields, which produces the yellow metal from three mines near Timmins, gained over 20% this week, after its biggest shareholder called the company “ridiculously undervalued”, and investors anticipated good news when the company reports its fourth-quarter earnings on Thursday.

The stock leapt 14.3% higher on Wednesday alone, responding to Trapeze Asset Management CEO Randall Abramson’s comments the previous day on Canada’s Business News Network channel.

“At current gold prices, St Andrews would have cash [per share] equal to their current share price in about three years time,” he said.

“It’s trading at 3.5 times earnings, it’s utterly ridiculous to me.”

Toronto-based Tapeze and the Abramson family collectively own around 55% of St Andrews.

One of the reasons for St Andrew’s poor valuation is that it investors punished it after it suffered production delays at its Holt mine in the second quarter.

The third quarter showed improvement, with the TSX-listed firm producing 20 000 oz, climbing to 22 350 oz in the fourth quarter.

“The market has been waiting to see two good quarters of turnaround,” a spokesperson for St Andrews said.

Casimir Capital analyst Steven Willis said the company was also expected to announce updated reserves and resources for a number of its projects, as well as the prefeasibility study results for the Taylor project.

The study was originally scheduled for completion at the end of 2011. Taylor “could plausibly be the next asset that will enter production” for St Andrews, the spokesperson said.

In January, the company forecast 2012 gold production to come in at between 90 000 oz and 100 000 oz, compared with the 74 022 oz it said it produced in 2011.

The company ended Wednesday with its stock price 9.9% higher at C$0.50, having traded as high as C$0.53 a share earlier in the day. Trading volume for the day was 4.2-million shares.
 

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