$CNMC Goldmine(5TP.SI)$  0.65 Target Price.

CNMC Goldmine is principally engaged in the exploration and mining of gold and the processing of mined ores into gold ores at its flagship Kelantan-based Sokor project, and is projected to grow its gold production at 7% CAGR, from 31,206 ounces in FY15 to 38,738 ounces by FY18F.

Additionally, the group has recently announced its proposed acquisition of a 51% stake in another Kelantan-based gold miner, Pulai Mining. Given their previous success in Sokor and similarities between the two in mineralisation and geological features, it's optimistic of a shorter time to production at the new project, of three years or under. While it have not assumed contributions from Pulai in our forecasts, the potential monetisation of in-ground resources at Pulai ahead could propel earnings outlook for the company.

Beyond Pulai, backed by net cash of US $33.4m, it is believe that CNMC could still be on the lookout for acquisitions to further accelerate growth opportunities for the group.

Given the volatile nature of gold prices and its potential impact on near-term earnings, the Target  Price i.e. TP of S$0.65 is based on a blend of DCF (1ACC of 10.7% and terminal growth of 1%), and peer average of 14x FY17F PE, which will better reflects CNMC’s superior cash generation and steadily growing gold production at Sokor.