Stock Profile: Peak Gold Ltd.
(TSXv: PIK; Market cap: CAD$420m; SO874m; FD969m)

Peak Gold is a junior producer with operations at its Amapari Mine in Brazil and Peak Mine in Australia. The company is on track to becoming a 200k+ ounce per year producer. Near term price catalysts would be good Q407 results and 08 guidance and/or potential M&A activity. PIKs board is the very capable old Wheaton River team of Giustra and Telfer. The stock is attractively priced.

Fundamentals:

Peak Gold was formed out of cash shell in early 2007. The company acquired 2 producing assets from Goldcorp in April 2007, the Amapari mine in Brazil and Peak Mine in Australia. The purchase price of CAD$300m was settled in cash ($200m) and $100m in equity.

Normally we prefer companies with a longer track record but in some respects Peak has existed for a long time albeit within the Goldcorp fold. This is very apparent when looking at management:

Recent ex-CEO and President Julio Lameiras Carvalho was formerly Goldcorps executive VP for central and South America as well as a 33 year veteran of Rio Tinto in Brazil. [Mr. Carvalho has recently been replaced by Robert Gallagher of Newmont Mining and may be the reason for recent price weakness]. COO Jim Simpson was previously Goldcorp�s general manager at the Peak mine in Australia. Therefore, both gentlemen are very familiar with the company�s assets.

In addition to quality operators, the company is well represented at board level with the capable financier Frank Giustra of Endeavor Financial and Goldcorp Chairman Ian Tefler.

Properties

Having produced 160k ounces by Q3, the company is well on its way to 220,000 ounces per annum as promised by management. This in spite of disappointing results from the Amapari mine.

Amapari is located in the Vila Nova Greenstone Belt, part of the Guiana Shield that covers the northern part of Brazil, parts of the Guianas and extends northwest into eastern Venezuela. An open pit mine with heap leach plant for exploitation and processing of gold ore at a capacity of 2.5 Mt/a.

The current heap leach process has been disappointing yielding a 67% recovery rate with a high clay content (exacerbated by rain). The company is investigating a mill and CIL circuit and is expected to announce plans to move forward with this in Q108.
The 43-101 compliant resource totals 2.4Moz, of which 1.0Moz is included within the measured and indicated category.

Peak Mines

Peak Gold mine is a medium size underground gold mine located in the Cobar Gold Field of Central West New South Wales Australia. Peak also produces copper concentrate. Reserves are estimated at 370k oz Gold and 27m lbs Copper.

Production for the 3rd quarter was a better than expected 31,703 ounces of gold (Q2 - 24,600) and 1,932,000 pounds of copper at a total cash cost of $176 per ounce. Exploration results at Chesney and Perseverance deposits are positive.

Valuation: Valuation: PIK has an EV/oz gold reserves + resources of $105 which is a good indicator of value in this absurdly undervalued Junior market.

The company carries no debt and is cashed up for acquisitions after its recent CAD$110m financing.

Insiders obviously agree with the under valuation thesis, piling in during December 2007 acquiring over 1m shares for +$500k.

Technical Analysis:

Figure 12 - Peak Gold mounting an attack on 60c

The company has had a short but dramatic price history. The stock climbed from 20c in late 2006 to the high of 90c on news of its formation and asset acquisitions.

The stock has been correcting ever since, reaching a low of 45c in September 2007 and a retest in December 2007. We think this a combination of week results from Amapari, too much hype on the initial offering and general Gold Stock weakness.

The stock has been building an upward trend since the Nov/Dec low and looks set to take out resistance at 60c.

Provided it continues to execute operationally and the Gold price remains strong, PIK should experience a healthy upward revaluation.

Money Management:

This is a very active and liquid stock with a CAD$420m market cap.
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Greg Silberman CFA, CA(SA)
Profession: Research Analyst and Newsletter Editor
Company: Ritterband Investment Management LLC
e-Mail: greg@goldandoilstocks.com

Career Brief:

Greg qualified as the youngest Chartered Accountant and Chartered Financial Analyst (CFA) in South Africa in 1998 at 25 years old. After completing his traineeship with Grant Thornton he moved to London where he worked for JP Morgan Chase in their Fixed Income Swaps Division. Sick of the grey skies and cold weather Greg relocated to Atlanta Georgia where he spent the next 4 years freelancing as a management consultant. His targeted clients were fast growing mid size US based companies and he worked across many industries including credit cards, health insurance and energy trading . Greg has recently returned from Sydney Australia where he spent the last 2 � years working in Equity Derivative Structuring for Perpetual investments a major Australian Asset Management Company.

Greg has a passion for the markets and has been writing Greg's market newsletter for two and a half years. A newsletter focused on metal and energy stocks and recently non-resource small caps listed in the US and Internationally.

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This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

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Peak Gold
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