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WGDF.OB aka Western Goldfields is a Gold mining company that popped up on my technical filter today with quite an impressive symmetrical chart pattern breakout on todays close. Looking forward the company has very strong estimates for 08′ and beyond from there Mesquite mine with an estimated 160k - 170k in annual production of gold from the period of 2008 - 2015.

So given lets say an a conservative average gold price of $650. This would mean gold price doesn’t change from todays price.

at 170k ounces/year thats $110.5m annual gold sales and they’re expecting cost of sales to be $350/ounce of gold mined totaling $59.5m in COGS resulting in an attractive 46% gross margin.

WGDF’s financial condition is also very impressive as well. Currently they’re sitting on $57.1m in cash with an astonishing 21.8 current ratio compared to the gold and silver industries 2.9! As well WGDF has no long term debt they’re in a very good position to move forward with production and growth in the coming years.

Currently WGDF shows no profits or significant sales. Analysts are expecting EPS of .14 for 2008 with a high estimate of .39 on sales of 74.28m or 4457% growth from this years estimate. The Gold and Silver industry PE is currently trading at 28.5x earnings. While WGDF currently doesn’t have a postive PE ratio they have a very attractive forward PE of just 10.45x earnings meaning that price will like continue its bullish trend to become fairly valued in the industry in the future.

Today WGDF released a very positive PR announcing production ahead of schedule by 3 months which gave way to todays bullish breakout.

Quote

Western Goldfields Announces Production Ahead of Schedule by Three Months
Monday June 18, 1:31 pm ET
- Full production pulled forward to January 2008
- Prestrip mining commenced June 2007

TORONTO, June 18 /PRNewswire-FirstCall/ - Western Goldfields, Inc. (TSX:WGI, OTC BB:WGDF.OB) today announced that it has pulled forward gold production at its Mesquite Mine to January 2008, three months ahead of schedule. Estimated average annual production is 160,000 - 170,000 ounces of gold for the period 2008 - 2015. In addition, the Company announced that its prestrip mining commenced in June 2007. All currency amounts are in U.S. dollars.

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“This acceleration of production is very exciting news for our shareholders,” said Randall Oliphant, Chairman. “This marks an important step in the transformation of Western Goldfields from a developer to a producer - only 22 months after our management team joined the Company. The completion of our financing and entering into the forward sales program, announced on June 14th, allows us to move forward rapidly with mining and construction. We expect to realize cash flow from operations much sooner, with a full year of gold production in 2008, which should translate into enhanced shareholder value.”

Three of fourteen Terex 205-ton haul trucks have arrived at the Mesquite Mine site, along with two O&K RH 340, 45 cubic yard hydraulic shovels. The shovels are fully commissioned and one is currently operating. All other critical mining equipment has been assembled and commissioned. These steps will allow the Mesquite Mine to ramp up production quickly as additional haul trucks are delivered, commissioned and put into service.

Under this new production schedule, estimated average cost of sales has increased from $335 per ounce to $350 per ounce for the first eight years of the mine plan. This increase is due to the operating costs associated with the purchase of one additional truck, the escalating cost of employment insurance in California, and enhanced employee benefits.

Initial capital costs are estimated at $108.6 million, unchanged from previously announced estimates. The mine life was lengthened to 12 years from an initial 9-1/2 years due to the increase in gold reserves. As a result, life-of-mine capital costs have increased marginally from $112.5 million to $114.9 million, due to increased estimates for fleet rebuild costs over the extended life of the mine.
I think this is a very attractive stock and we should be able to pull out a decent gain on this trade. I’ll be looking to buy this tomorrow hopefully in the range of 2.20 - 2.30 or so.

-fous

PUDC released some very bullish news on June 12th of an acquisition of a coal washing plant that will increase their annual capacity to 3.5m MT further positioning them as the largest cleaned coal processor in the Shanxi province.

Quote

Under the terms of the agreement, Puda Coal will acquire a coal washing plant with 1.2 million metric tons (”MT”) of annual coal washing capacity from Jinliao Coke. In consideration, Puda Coal will pay Jinliao Coke $6.0 million in cash and transfer its Shanxi Liulin Dongqiang coal washing plant, which is valued at $1.5 million and has 400,000 MT of annual coal washing capacity. The transaction will add 800,000 MT processing capacity to Puda Coal’s operations, bringing total annual coal washing capacity to 3.5 million MT.

This is great news for PUDC as it expands there ability to grow in sales and profits. Words from the CEO:

Quote

“Our expanded coal washing capacity of 3.5 million MT, solidifies Puda Coal’s position as the largest cleaned coal processor in the Shanxi province, and allows us to meet the large orders requirements of steel manufacturers and coking companies,” said Zhao Ming, Puda Coal’s Chairman and Chief Executive Officer. “Major infrastructure projects continue to drive demand, and we intend to further increase capacity to 4.0 million MT by year end.”

Another look at PUDC’s growth from my analysis in May:

Ive been waiting for PUDC to recollect itself and form a bullish chart again. I think that day has arrived after todays session. Price is still yet to break above 2.50 resistance but i think that day will come in the not so distant future. I’ll buy PUDC tomorrow if it looks to be breaking out of 2.50 on increased volume or look to buy on a dip near the midpoint of todays candle.

-fous

MAJOR EXCHANGES:
AAV
MCZ
SMDI
SWHC
BOW
YHOO
POZN
TMTA
HOKU
HNR
CMED

OTCBB:
FEEC
ULUR
PYSC
SCEY
CHCG
PUDC*
GSGT
SKNN*
WGDF*
UVSE

Company Profile:

ShengdaTech is engaged in the business of manufacturing, marketing and selling a variety of nano-precipitated calcium carbonate (”NPCC”) products and coal-based chemicals for use in various applications. The Company converts limestone into NPCC using its proprietary technology. The unique chemical and physical attributes make NPCC a valuable ingredient in tires, paints, polyvinyl chloride (”PVC”) building materials and other products. NPCC enhances the durability of many products by increased strength, heat resistance, and dimension stabilization. The Company is also engaged in the manufacture and sale of coal-based chemical products namely ammonium bicarbonate, liquid ammonia, melamine and methanol. The Company markets and sells its coal-based products mainly for chemical fertilizers and raw materials in the production of organic and inorganic chemical products, including formaldehyde and pesticides.

Fundamental Evaluation:

SDTH had a very strong first year reporting as a publicly traded company posting some impressive earnings. For fy 2006 they posted revenues of $72.6m with a 28% gross margin and minimal operating costs at just $3.9m SGA leaving them with net income of $17.5m on the year. SDTH’s financial condition was quite impressive as well when i looked over there balance sheet. Currently they’re sitting on $34.6m in cash with an outstanding current ratio of 4.38, 2 is optimal, 4.38 is very nice to see. On top of that SDTH is currently subject to zero long term debt so there financial condition is very healthy and look more that set to move forward with growth.

Industry Comparison:

SDTH looks very undervalued when comparing them to the industry averages. SDTH is trading at just 15.17x earnings compared to the Chemical Manufacturing average of 31.8x so we could expect SDTH’s price action to continue its bullish trend as it attracts more investors, especially since its currently holding a very low forward PE of just 9.53x earnings. The price to sales ratio is slightly above the industries with SDTH at 3.83x and the avg of 2.5x. But the P/S ratio is usually of not that much significance. I like to see it below but with SDTH’s PE ratios so undervalued its not of much importance. As i said before the current ratio of 4.38 is very attractive compared to the avg 2.6.

07′ guidance:

SDTH reported very strong fiscal 07′ guidance on Friday which gave way to a very bullish technical breakout on heavy trading and lead me to further analysis of the company.

Report as follows:

Quote

For fiscal year 2007, ShengdaTech expects to generate revenue of $96 - $98 million, up 32.2% to 35.0% from $72.6 million in 2006. The Company expects net income to increase approximately 31.2% to 36.9% to $23.0 - $24.4 million for earnings per share of $0.43 to $0.45. The Company also expects margins to improve throughout the rest of the year as its higher margin NPCC segment contributes a greater percentage of overall revenue.

”We are very pleased with the progress we have made to date and expect continued growth going forward,” commented Mr. Xiangzhi Chen, CEO of ShengdaTech. ”We continue to operate at full capacity in both of our factories and will have an additional 40,000 metric tons of NPCC capacity in Xi’an City online this month. We also expect to increase NPCC capacity by an additional 60,000 metric tons by the end of 2007.”

Technical Analysis:

SDTH had a very bullish breakout last friday after the PR of their fiscal 07′ guidance was released. Sending price up to as high 33% at one point. Though profit taking took over and drug price down to close up 18% on the day with very attractive volume. Although the closure of the day formed an extended upper shadow with some bearish implications the breakout was solid from the ascending triangle neckline, which signifies the likely possibility of a bullish continuation in price especially when considering the fundamentals in conjunction with technicals. I’m still yet to fill a position but will look to buy in tomorrows session as i think the bullish trend will continue here.

-fous