After keeping SGR at a HOLD rating for a while, TD Waterhouse has upgraded San to BUY. They are maintaining their $3.00 target. The report was published early this morning.

Here is a short excerpt from the four page copyrighted report:

"While operating results were released in early April (production came in at 14,690 oz of gold, representing a 17% increase over Q3/10-Q4/10 was not representative, as the company focused on development), the company managed to surprise us on its cost performance. Operating costs came in at $862/oz versus our expectation that they be closer to $1,000/oz this quarter.

With gradual improvement expected over the balance of the year, as fixed costs are distributed over growing production, the company should be on track to surpass its guidance. This marks a dramatic improvement in the company’s performance under the prior leadership of Dale Ginn who was replaced by the current President and CEO, George Pirie, in December.

The company previously guided to production of 80,000 oz this year starting at 15,000 oz in Q1 and growing to 25,000 oz in Q4, with cash costs approaching $650/oz by year end. We had been forecasting 80,000 oz at average cash costs of $850/oz and we are now revising to 85,000 oz at $714/oz based on the results.

Our NAV increases slightly to $1.94/share (from $1.90) and we are upgrading the stock to BUY (from Hold) on price depreciation – the stock has declined 35% this year making it one of the worst performers in our coverage universe. Our Target Price is unchanged at $3.00/share."