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[AndyB]

Santa Fe Gold Corp (SFEG), OTC listed

Buy and Hold strategy:

Buy price: Now! ($1.20)
Estimate sell date: years
Estimated price: $3-8
Drop price <$1 stop loss if production is delayed.

Volume Breakout Strategy:

Buy price: Volume break of recent high ($1.36) on production news
Estimate sell date:
Estimated price: $1.84 (Next resistance)
Drop price: On a volume breakout, move stop to below the break level ($1.20?)

Why buy SFEG?

Here's a quick summary of why I think SFEG could be trading in the
$3-5 range in a few years time. Right now at the time of writing SFEG is $1.20, with a market cap of $70m and has just had a run up from 65 cents after its start of production news.

SFEG have various projects, the summit gold project is the one that is
about to produce. Here they have 2,000,000 ounces of gold in the
ground which at todays gold price ($950) is valued at around $1.8bn.

They just started mining ore and within weeks will begin processing for gold, generating vital revenue.

The Dutton Research report on their website dated April 2008 - Santa Fe Gold
- shows projected profit after costs before tax of $3m / quarter, or $12m / year. With earnings of $12m and a PE of 20x this will value SFEG at $240m. With rougly 70m shares in issue this should put the share price at $3-4.

But wait, it gets better. The report was based off $650 gold price. SFEG's gold recovery cost is $300/ounce. At the current gold price of near $1000 their profits could double, which would put their market cap closer to $500m and the share price closer to $6-8. If gold reduces in the short term, SFEG will still be in profit. If gold increases in the long term, then SFEG has great leverage due to its low production costs.

The above valuation is based off the revenue of the Summit gold project alone. It doesn't include the asset valuation of the company nor other avenues of income.

SFEG is developing other lines of revenue such as a separate gold/ortez project, mica, silver plus the potential to make acquisitions as the revenue starts coming in.

Some data taken from the "Why Invest" page on the SFEG website

* Proven management team – extensive experience, impeccable
credentials, disciplined.
* Management ownership in excess of 25%.
* One mine is nearing production and a second is in the pipeline.
* Operating costs are estimated to be less than $300 per ounce of
gold produced.
* Resources exceed 2 million ounces of gold with excellent
exploration upside.
* Santa Fe Gold offers significant exposure to silver as well as
to gold.
* Industrial mineral assets provide diversification.
* Properties are all located in the politically stable United
States.
* Strategy for growth through increased production, acquisition
and/or merger.
* 36 potential acquisitions have been identified.
* Santa Fe Gold is undervalued considering its substantial
resource base and in light of its imminent production. Market
revaluation can be anticipated in 2009 as the company transitions from
an exploration company to a producing company.

For more info visit Santa Fe Gold and check the investor
relations pages. All the data is there to see for yourself.

To get in the big-leagues this current project will need to be a
success and SFEG will need to complete further exploration /
acquisition in order to generate more revenue streams. As always, do
your own research and be careful when investing, as nothing is
certain. That being said I believe that SFEG is a strong speculative
buy with great upside potential in the coming years.

Further information can be found in this recent investor presentation, dated February 2009, and other links below

Dutton Research Reports April 2008
Investor Fact Sheet December 2008
Production News release Feb 2009
Investor Presentation Feb 2009

[R MAN AUDIO]

Volume is too low to play with. I could see this as a long play but any gold stock would be a good long play as the USD loses its value and people start looking at gold. When gold goes in the $800s its a good time buy gold stocks.

[AndyB]

Yes I should have said this is a long term play, not a trading stock. I intend to execute Trants' "Free Shares" strategy on this one :)

[VicVan]

Good tip data and good feedback stating abou the volume. Adds contrast - I buy low volume, some hate it
Vic

[R MAN AUDIO]

Originally Posted by VicVan Good tip data and good feedback stating abou the volume. Adds contrast - I buy low volume, some hate it Vic

I hate low volume stocks....its hard to buy large quanities of stocks and extremely hard to sell unless the stock blows up!

One of my first leasons that I learned from trading is not to buy low volume stocks. Under 500K a day is low! It is good for long plays..really long plays.

[Mac]

Nice Post, thanks for the info. I'll add this to my watchlist...I'd like to pick it up sub-1 if I can. It does look like a good long. For those daytraders out there, a long is a stock that you buy and actually hold for longer than a few minutes, usually into the years. lol

[AndyB]

Lol, yep. Its a long term stock :)

I've been watching it for a while and its been stuck in the $1 - $1.20 range for months. I hold SFEG from $0.65 and added at $0.90. I will add on a volume breakout above its recent high of $1.35. This will probably only occur if there is news released that they are processing stockpiled ore.

In the beginning of Feb they started stockpiling ore and said "In 2 months we'll be processing". Well that's about now give or take a week so expect some news soon.

If not, then the share price will slide as speculators will get bored of waiting.

If you're a chart fan then over several years there's a massive cup and handle formation on the chart. Right now we're in the low-volume consolidation or the "Handle". The trading buy signal is when the stock breaks above the high formed in the handle, on strong volume. The technical target for this cup-handle is about $2.



Edit: I added some more reports to the initial post.

[AndyB]

Hi guys. I updated the first post to fit with VicVanVader's posting format. There's two strategies for you there, one for the buy and hold investor, the other for a trader.

Enjoy!

[VicVan]

This whole thread and feedback is a perfect example of a well executed thread and feedback comments

Low volume = high risk sure. But you get nutty upswings as well as nutty down. The bit I hate is when you go to sell and the bid / ask is so far apart you make 50% less than you thought you did.....but yes long plays, spreading out over multiple low volume as some just die.

Anyway - back to focus on this tip. Excellent data in the first post and a example to others.

[AndyB]

The rumour (and heresay) is that SFEG has completed its stockpile of ore and is preparing to announce production.

Watch for a volume breakout above the recent high ($1.36) on production news. I will be adding on a breakout with a stop-loss at $1.15 for a swing trade. My core position stands, I hold at $0.65 and $0.90. I will sell half my position when SFEG runs into resistance. I have a target of around $1.8 for this stock on a news production announcement and a long term target of $3-8, which may take a while to achieve, but here's hoping

Good luck all. Make sure you do your research and read the investor reports - know what you are buying before you buy it.