gold tracker 190619 · 2020. 2. 6. · page 2 resources 20 june 2019 the highlights reel of recent...
TRANSCRIPT
20 June 2019
Bells Gold Tracker
ASX-listed gold review
Analyst
David Coates 612 8224 2887 Analyst
Peter Arden 613 9235 1833 Authorisation
Stuart Howe 613 9235 1856
BELL POTTER SECURITIES LIMITED ABN 25 006 390 7721 AFSL 243480
DISCLAIMER: THIS REPORT MUST BE READ WITH THE DISCLAIMER ON PAGE 28 THAT FORMS PART OF IT.
Page 1
The Bells Gold Tracker is a periodic review of ASX-listed gold equities and the gold market. We run through current market
themes, our current coverage, our quarterly production monitor, gold-producers’ and explorers’ comparison tables, a gold
equities performance “heat-map” and some key price and relative value charts. In this edition we have also included
summaries of key gold producers on our research coverage list. Our coverage is shown in Table 1 with recommendation
changes included with this update listed below.
Table 1 - Bell Potter precious metals coverage
SOURCE: BELL POTTER SECURITIES
We upgrade Regis Resources (RRL) to Buy, Target Price $5.40/sh (was Hold, TP$5.35/sh) on share price depreciation.
We upgrade Millennium Minerals (MOY) to Buy, Target Price $0.12/sh (was Hold, TP$0.12/sh) on share price depreciation.
We downgrade Dacian Gold (DCN) to Speculative Hold, Valuation $0.55/sh, (was Speculative Buy, TP$2.75/sh) on material
downgrades to guidance resulting in significant cuts to our earnings and valuation (see p8).
TALKING POINT
It’s a bit hard to go past the spate of recent blow-ups among the single-asset gold development stories. It’s been a slow and
painful burn for some and a spectacular fall from grace for others. Add another handful that are on a “red-flag” watchlist and it’s
easy to understand the market’s increased caution and associated de-rating of these companies’ peers. Anything carrying
extra technical risk, or a project with a Resource or Reserve that looks in any way marginal is being heavily discounted as the
market applies an increased risk premium or concludes that there is no margin for error should anything go wrong.
Figure 1 – Selected ASX gold equities heat map of rolling share price performance - on the road to glory
SOURCE: IRESS, BELL POTTER SECURITIES ESTIMATES
EGS was omitted from this table due to its multiple quarters of suspension from trading.
Prices at 19/06/2019 Market capitalisation Price Target price Recommendation Analyst
Regis Resources Ltd (RRL) $2,367m $4.66/sh $5.40/sh Buy (from Hold) DCGold Road Resources Ltd (GOR) $847m $0.97/sh $1.15/sh Hold (Spec) PADacian Gold Ltd (DCN) $122m $0.54/sh $0.55/sh Hold (Spec) from Buy (Spec) DCWestgold Resources Ltd (WGX) $636m $1.64/sh $1.95/sh Buy PAPantoro Limited (PNR) $178m $0.17/sh $0.35/sh Buy DCMillennium Minerals Ltd (MOY) $51m $0.06/sh $0.12/sh Buy (from Hold) DCBreaker Resources NL (BRB) $63m $0.31/sh $0.84/sh Buy (Spec) DCXanadu Mines (XAM) $34m $0.05/sh $0.55/sh Buy (Spec) PAS2 Resources (S2R) $24m $0.10/sh $0.32/sh Buy (Spec) PASilver Mines Ltd (SVL) $30m $0.04/sh $0.05/sh Hold (Spec) PA
3 months 3 months 3 months 3 months 3 months 12 months
Stock to Jun-2018 to Sep-2018 to Dec-2018 to Mar-2019 to Jun-2019 to Jun-2019
GCY -9% -46% -60% -9% -60% -92%
BLK -16% -39% -5% -33% -68% -88%
ARV -3% -3% -35% -50% -48% -84%
DCN -15% -13% -9% 17% -78% -80%
MOY -3% 18% -24% -2% -67% -71%
SBM 20% -25% 21% 4% -39% -43%
Page 2
Resources 20 June 2019
The highlights reel of recent spectacular wipe-outs includes:
• Gascoyne (GCY): Negative Reserve and Resource reconciliations saw a mined grade of ~0.8g/t Au over the first 18
months of mining, vs the Reserve grade of 1.3g/t Au. This resulted in All-In-Sustaining Costs (AISC) blowing out to
>A$2,000/oz vs the targeted ~A$1,000/oz. GCY has now gone into administration;
• Dacian (DCN, Speculative Hold, Valuation $0.55): Everything went well for DCN until it came to mining the gold.
Declaring commercial production on 1 January 2019 and guiding FY19 production of 180-210koz, DCN subsequently
downgraded to 150-160koz in late March (including 50-55koz for the June quarter). However, in early June DCN cut this
to 138-140koz for FY19 and, more dramatically, gave preliminary FY20 guidance of 150-170koz at AISC of A$1,350/oz-
$1,450/oz and lowered longer term annual production to 160-180koz. This is ~15% lower than the targeted ~200kozpa
life-of-mine average at AISC of ~A$1,000/oz. While production and reliability issues contributed, the key driver appears to
be negative reconciliations of 15% for Reserve ounces to milled ounces. In other words, 15% of the ounces in the
Reserve don’t appear to be there, resulting in lower grades, lower production, higher costs and a big hit to valuation.
• St Barbara (SBM): Spectacularly fell from grace with the release of a long-awaited feasibility study into the long-term
haulage options at its Gwalia underground, which is heading to 2,300m below surface. Higher costs and technical risks of
alternative options led SBM to stick with truck haulage, implying lower production and higher costs than had been
anticipated by the market. Still, with a preliminary outlook for longer-term production of 220-230kozpa and higher (but still
profitable) costs, there was light at the end of the tunnel. Unfortunately, this was the oncoming train of an unpopular
acquisition (Atlantic Gold (AGB CN) for A$768m) and associated A$490m capital raising. The raise came undone when
SBM downgraded Gwalia’s FY19 production by 15koz to 220koz, leaving underwriters with A$127m in stock.
• Blackham (BLK): With a Stage 1 production objective of 100kozpa when it poured first gold in October 2016 and a longer
term Stage 2 objective of 175-230kozpa, BLK had a Resource base of 5.1Moz @ 3.3g/t Au and Reserves of 560koz @
2.5g/t Au. Of the Resource, 3.5Moz (69%) was refractory, so the plan was to run at 100kozpa from oxide material grading
2.0.g/t and then expand the plant to treat refractory ore and achieve the Stage 2 production target. The share price has
never recovered. A year later, BLK was undertaking its first re-financing, grades had struggled to get above 1.5g/t Au,
recoveries fell away as refractory ore was mined and production ran at 60kozpa. This lifted to 80kozpa in 1HCY18 and
AISC briefly dropped below A$1,500/oz in the March 2018 quarter but this was as good as it got. FY19 guidance was set
at 77-89koz at AISC of A$1,250/oz, but in the most recent quarterly was cut to 66-68koz @ AISC of A$1,700/oz.
• Eastern Goldfields (EGS): An under-capitalised development plan, low Resource to Reserve conversion, underground
mining without Reserves, milled grades of <1.5g/t Au vs Resource grades of ~3-4g/t and Reserve grade of 2.3g/t Au all
led to a catastrophic production and cost performance. Mill throughput got to half of 1.2Mtpa nameplate at best and while
AISC were never reported, we estimate the best quarter was +A$2,400/oz. EGS is currently being re-capitalised under a
new Board and management as Ora Banda Mining;
• Artemis (ARV): We’d almost forgotten about the watermelon seed nugget craze that saw ARV’s share price peak at
$0.55/sh (mkt cap A$300m) – that is until we ranked the stock performances on our Heat Map and noted ARV’s current
share price of $0.038/sh. The saving grace of this project is that the story waned before any real capital was invested.
Page 3
Resources 20 June 2019
But the A$ gold price is at all-time highs – I need to get some of the action!
The paradox of all this is that the A$ gold price is at an all-time high, having pushed through A$2,000/oz in the last 24 hours.
Furthermore, in our view, key drivers remain supportive of a positive price outlook:
• Global inflation expectations are low and real interest rates have dropped significantly, lowering gold’s holding cost;
• Safe haven trade has begun to re-emerge on the US-China trade war and recent geopolitical tensions; and
• The A$ is in a declining trend, having broken down below AUD:USD 0.70, and facing an easing interest rate cycle.
While there is some evidence of labour market tightness and input cost inflation in the Australian mining industry, the well-
managed producers are controlling costs, making excellent margins, have strong balance sheets, are delivering returns to
shareholders and have largely exercised capital discipline. A quick scan of the better-performing end of our Heat Map shows
some very handy capital returns (several have paid dividends on top of this) from some of the larger (multi-billion dollar) names
in the sector:
• Newcrest (NCM): up 43% in the 12 months to June;
• Saracen (SAR): up 62% in the 12 months to June; and
• Northern Star (NST): up 68% in the 12 months to June.
We believe attractive opportunities are currently available in the gold sector through which exposure to the very positive macro
environment can be gained. As always, there are no guarantees, but we have run through our coverage to weigh up our best
risk-reward propositions. We especially see this in the single-asset production companies, where the valuation of good assets
and management teams have suffered from the mistakes of their peers.
Top Pick – Pantoro Limited (PNR): Buy, TP$0.35/sh
As a single asset producer PNR will carry additional risk. This will be mitigated following the recent acquisition of the Central
Norseman Gold Project (CNGP), but we do not expect first production from here for ~12 months. In the meantime, we are
expecting production at PNR’s 100%-owned Nicolsons mine to successfully ramp-up to a run-rate of ~80kozpa from the end of
the June 2019 quarter and for AISC to drop to ~A$1,000/oz. We believe a strong, debt-free balance sheet, expanding margins
and management’s solid track record of delivery will separate PNR from the pack and earn a premium rating vs peers.
Regis Resources Limited (RRL): Buy, TP$5.40/sh
While RRL does not offer the current deep value proposition of PNR it does, in our view, offer attractive relative value
compared with its multi-mine producer peers and a relatively low risk profile. As one of the lowest cost pure gold producers it
offers less leverage to a rising gold price but strong cash flows will likely translate into high shareholder returns.
Page 4
Resources 20 June 2019
Regis Resources Limited (RRL)
Reliable production, low costs, sector leading returns
RRL has one of the best track records in the sector for delivering or beating production and
cost guidance. In both FY17 and FY18 production landed in the top half of the production
guidance range and AISC came in below the bottom end of the cost guidance range. For
FY19ytd this is again the case. When issues have arisen, as they last did in 2014 when the
Garden Well pit was flooded and reconciliation and metallurgical recovery issues emerged
in parts of that orebody, they were dealt with effectively. RRL drew down on A$50m debt,
re-cast its Reserves and re-optimised its pits. Within 12 months operations were well on
their way to recovery, cash was building on the balance sheet and debt repayments had
commenced. RRL is now one of the only producers in the sector to consistently report
AISC of A$1,000/oz or below and almost the only one to do so without the benefit of by-
product credits. This drives some of the highest AISC margins in the sector and
comfortably the highest dividend payout ratio in the sector – typically paying out 13-15% of
revenues as fully franked dividends. Capital discipline is also a feature. In late 2018 RRL
walked away from the planned acquisition of Capricorn Metals (CMM), when CMM’s 18.9%
shareholder would not support RRL’s offer of 11.4cps (in RRL shares). CMM continues to
trade at a discount to this level.
Investment thesis – Buy, Target Price $5.40/sh
Apart from the strong operational track record, low costs, strong balance sheet and sector
leading shareholder returns, one of the key attractions of RRL for us has been that it owns
its growth. Although the McPhillamys development project in NSW is unlikely to be
approved for another 18 months, it has potential to add 200kozpa it offers strong organic
growth. Meanwhile, RRL’s flagship operations at Duketon are showing excellent potential
for underground mines to add supplementary high grade feed to drive production growth.
With head grades coming off a low base (~1.0g/t Au) and 10Mtpa of installed milling
capacity, we see a recipe for very capital efficient production growth at Duketon. We have
made changes to our valuation, reflecting the March quarterly and our latest commodity
price and foreign exchange rate forecasts. We lift our Target price to $5.40/sh and our
recommendation from Hold to Buy.
Company description
RRL is a specialist low grade, open pit gold producer with all of its mines located in
Western Australia. The management team have a built track record of being very efficient
operators and for on-time, on-budget project delivery. The Duketon Gold Project (located in
the Laverton region 350km north, north-east of Kalgoorlie in WA) is RRL’s flagship project,
and comprises the Duketon North Operations (DNO) which comprise the Moolart Well and
Gloster deposits and the Duketon South Operations (DSO), which comprise the Garden
Well and Rosemont open pit mines and the Erlistoun deposit. These are all now in
production through a combined 10Mtpa of installed processing capacity across the
Duketon Project.
McPhillamys is a prospective, large, potential open pit project located in NSW, about 35km
from Orange and Bathurst and is currently undergoing further pre-development studies.
Both Duketon and McPhillamys originated from RRL’s strategic relationship with Newmont
(which involved the transfer from Newmont of its interest in the former project in return for a
20% interest in RRL, which Newmont has since sold).
Page 5
Resources 20 June 2019
Pantoro Limited (PNR)
Project delivery and value accretive acquisition
PNR is ramping up production at its Nicolsons Gold Mine from a ~50-55kozpa run-rate to
80kozpa, aiming to hit this level by the end of the current June quarter. It has to be
conceded that this is approximately 6 months behind the original schedule, as the initial
ramp-up was disrupted by poor ground conditions resulting in excessive dilution. While this
has necessitated a change in the mining method (now implemented), PNR has consistently
maintained head grades in-line with its Reserve grade of 7g/t Au and, if anything, enjoyed
positive reconciliations. Production risk is further mitigated by the addition of two new ore
sources – the Wagtail South open-pit and the Wagtail North underground. We also point
out that while a key element of PNR’s expansion is reliant on relatively new ore-sorting
technology, they have conducted extensive testing on all their ore types and completed
production runs that have delivered ore upgrades in-line with expectations. The coming
months will be the key test, but we believe good work has been done to mitigate the risks.
PNR also recently executed a binding agreement to acquire a 50% share of the Central
Norseman Gold Project (CNGP) and take immediate management control, with the aim of
returning the CNGP to production in the near term. From a valuation point of view, PNR
has effectively acquired its interest for A$39.09/oz, an approximate 38% discount to the
A$63/oz we currently measure in the market. The deal sets a strong foundation for growth
and creates the opportunity for PNR to execute a strategy as a high grade, multi-mine gold
producer which would position PNR as a unique offering on the ASX.
Investment thesis – Buy, Target Price $0.35/sh
Acquisition of 50% of the CNGP and management control of the asset lays out a clear
pathway to capital efficient growth for PNR. In the near-term we see replication of the re-
start model executed at Nicolsons, to establish near-term production of ~100kozpa. The
CNGP is also a significant scale tenement package with the potential for major discoveries,
which we think is one of the key opportunities for PNR over the longer term. PNR is one of
our top picks in the gold sector and we rate it a Buy with a Target Price of $0.35.
Company description
PNR is a growing gold production and development company. The 100% owned Halls
Creek Project (including the Nicolsons Gold Mine) is PNR’s flagship project. The project is
located in the Kimberley Region of Western Australia, approximately 45km SW of the town
of Halls Creek. First gold was poured at Nicolsons in September 2015 and PNR has now
established steady-state production at 50-55kozpa and All-In-Sustaining-Costs (AISC)
around A$1,100/oz. Implementation of an ore sorting program is expected to lift gold
production to a run-rate of >80kozpa from mid-CY2019 and result in lower costs. PNR has
also acquired a 50% share in, and management control of, the Central Norseman Gold
Project (CNGP), south of Kalgoorlie in WA. The project covers >1,000km2 of tenements,
the majority of which are granted Mining Leases. The CNGP has a large, high grade gold
Resource base totalling 4.4Moz grading 3.9g/t Au, including underground Resources of
2.1Moz grading 15.3g/t Au and surface Resources of 2.4Moz grading 2.3g/t Au. With past
production of >5.5Moz, well established infrastructure including an operating power plant,
sealed airstrip, past producing mill, plus road and rail access all neighbouring the
Norseman town, it provides an excellent platform for exploration and production growth.
Page 6
Resources 20 June 2019
Westgold Resources Ltd (WGX)
Higher underground grades boost dominant Murchison position
WGX has built up the dominant land and processing position in the Murchison district of
WA, where it has operated something like a dozen open pits and stockpiles over recent
years while focused on redeveloping multiple higher grade underground mines. Recently
the underground mines at the company’s three operations in the Murchison have begun to
demonstrate clearly that they are capable of delivering higher production to meet the
company’s production target of 270 - 300koz in FY20 and over 300kozpa beyond that as
the Big Bell mine ramps up to targeted rates on a long term basis. Divestment of the
company’s Higginsville Gold Operation through it being merged with the nearby
complementary assets of Royal Nickel Corporation (RNX) makes WGX the largest single
shareholder of RNX and gives it exposure to high grade gold production from RNX’s
exciting Beta Hunt operation, which will be processed at the Higginsville mill.
Investment Thesis – Buy, Target Price $1.95/sh
WGX’s gold production in 3Q FY19 showed that the improving performance expected over
the course of 2019 is underway as the company continues to bring on stream more of its
higher grade underground ore from its key Murchison mines with Big Bell on track to reach
full production by year end. As WGX continues to ramp up the performance of its
underground mines, average all in sustaining costs are forecast to decline to the range of
A$1,340 – A$1,410/ oz in FY20, generating growing free cash flow as mine development
declines to sustainable levels. Our target price of $1.95/share is based on our 12-month
forward NPV-based valuation. Our Buy recommendation is retained.
Company description
Demerged from Metals X Limited in December 2016, WGX is a significant and growing
gold producer with three 100% owned operations in the Murchison district of WA and an
advanced exploration project in Northern Territory. Current gold production is running at
an annual rate of around 270koz at an average AISC of around A$1,500/oz. WGX’s gold
production is expected to increase towards 350koz over the next few years at a lower
average AISC of around A$1,360/oz and possibly even lower. The company also has
significant exploration activities, mainly involving a near mine focus. The company’s gold
operations located to the north of Meekatharra comprise the Murchison Gold Operations
(MGO), the Cue Gold Operations (CGO) and the Fortnum Gold Operation (FGO). The
Murchison operations commenced production in late 2015 and while they are still
undergoing ramp-up, they have been transitioning from multiple open pit mines to higher
grade long life underground mines supplemented with minor open pit production. MGO’s
Bluebird mill has a processing capacity of 1.4 -1.6Mtpa; and CGO’s Tuckabiana mill has a
processing capacity of about 1.2 – 1.4Mtpa. At CGO, Big Bell is set to become WGX’s
flagship mine, having recently begun to deliver stope ore and it is planned to build to full
production rate by the end of 2019. FGO’s Fortnum mill has a processing capacity of 0.9 -
1.0Mtpa and continues to ramp up gold production as the Starlight underground mine now
becomes the dominant ore source. The Rover Project near Tenant Creek in the Northern
Territory contains a high grade gold-copper-bismuth Resource in the Rover 1 Prospect
(with similar mineralisation at the Explorer 142 Prospect) that is expected to be further
evaluated by exploration decline prior to a potential development and it also contains
significant zinc-lead-silver mineralisation nearby. The company also owns 100% of mining
contractor, ACM, which has been extensively re-capitalised and is now operating profitably.
Page 7
Resources 20 June 2019
Dacian Gold Ltd (DCN)
Textbook project development – but where’s the gold?
Everything went well for DCN until it came to mining the gold. Declaring commercial
production on 1 January 2019 and guiding FY19 production of 180-210koz, DCN
subsequently downgraded to 150-160koz in late March (including 50-55koz for the June
quarter). However, in early June DCN cut this to 138-140koz for FY19 and, more
dramatically, gave preliminary FY20 guidance of 150-170koz at AISC of A$1,350/oz-
$1,450/oz and lowered longer term annual production to 160-180koz. This is ~15% lower
than the targeted ~200kozpa life-of-mine average at AISC of ~A$1,000/oz. While
production and reliability issues contributed, the key driver appears to be negative
reconciliations of 15% for Reserve ounces to milled ounces. In other words, 15% of the
ounces in the Reserve don’t appear to be there, resulting in lower grades, lower
production, higher costs and a big hit to valuation.
Open-pit mined grades have averaged 0.9g/t Au to date from ~1.8Mt mined and compare
with the July 2018 Mineral Resource and Ore Reserve grades, both of 1.3g/t Au for the
Jupiter open-pit. Underground grade distribution is more variable, and less material has
been mined (~750kt to March 2019), but the grade of underground ore mined to date
stands at 3.6g/t Au and compares with a combined underground Reserve grade (for
Allanson and Beresford) of 4.1g/t Au. The milled head grade to date of 1.7g/t Au compares
with the blended Reserve grade of 2.2g/t Au for these deposits.
Investment thesis – Speculative Hold, Target Price $0.55/sh
While DCN has taken a big reputational hit and the impact of grades potentially being 15%
lower than plan is clearly material to cash flows and valuation, the show is not over yet. We
have re-cast our numbers on 15% lower grades, which drives lower production and higher
costs. On our current gold price forecasts we estimate, crucially, that DCN can meet the
debt service and repayment obligations on its A$123.5m debt balance. Risk around this is
mitigated by its hedge book and a remaining ~8yr mine life, which could conceivably
support a debt re-structure if necessary. We also point out that while our updated project
NPV is comfortably below MMGP’s CAPEX (a sunk cost), the project still generates
~A$35-40m per year of free cash flow on average over the life of mine. As such, there is a
case to be made for DCN being a corporate target, particularly if there is an opportunity to
re-optimise the mining operations on a revised Resource and Reserve base. We make a
Speculative Hold recommendation and value DCN at $0.55/sh.
Company description
DCN is a West Australian based company focused solely on the exploration and
development of its 100%-owned Mt Morgans Gold Project (MMGP) near Laverton in
Western Australia. The company acquired the project in early 2012, and since then has
increased the Mineral Resource base from 8.5Mt at 3.1g/t Au containing 0.84Moz gold to
54.7Mt at 2.0g/t Au containing 3.5Moz gold as at July 2018. On the basis of this Resource,
DCN has calculated a Reserve of 18.6Mt at 2.0g/t for 1.2Moz contained. Construction of
the MMGP commenced in late 2016 and production commenced in the June quarter of
2018. Originally guiding production and costs for FY19 at 180-210koz and AISC of
~A$1,000/oz, poor Reserve reconciliations have led to a material downgrade of
expectations. DCN most recently guided 138-140koz for FY19 and gave preliminary FY20
guidance of 150-170koz at AISC of A$1,350/oz-$1,450/oz.
Page 8
Resources 20 June 2019
The net impacts of these changes are summarised in the table below:
Table 2 - Changes to earnings estimates - DCN
Previous New Change
Year ending 30 June 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e
Prices & currency
Gold (US$/oz) 1,348 1,397 1,397 1,274 1,400 1,420 -5% 0% 2%
Gold (A$/oz) 1,797 1,863 1,863 1,769 1,905 1,893 -2% 2% 2%
US$/A$ 0.75 0.75 0.75 0.72 0.74 0.75 -4% -2% 0%
Production & costs
Ore milled (Mtpa) 2.50 2.51 2.50 2.50 2.51 2.50 0% 0% 0%
Head grade (g/t Au) 3.1 2.7 2.6 1.90 2.14 2.08 -38% -20% -20%
Gold produced (kozpa) 224 196 189 140 159 153 -37% -19% -19%
All-In-Sustaining-Cost (A$/oz) 914 1,033 1,117 1,524 1,278 1,364 67% 24% 22%
Earnings
Revenue (A$m) 405 370 359 236 280 263 -42% -24% -27%
EBITDA (A$m) 212 179 159 30 91 65 -86% -49% -59%
EBIT (A$m) 159 133 114 (22) 32 8 -114% -76% -93%
NPAT (adjusted) (A$m) 108 90 78 (30) 27 3 -128% -70% -96%
EPS (reported) (cps) 54 45 39 (22) 20 3 -141% -56% -93%
PER (x) 1.0 1.2 1.4 (2.4) 2.7 21.1 (3.4) 1.5 19.7
EPS growth (%) 94% -17% -13% na na -87% na na -74%
DPS (reported) (cps) - - - - - - 0% 0% 0%
Yield 0% 0% 0% 0% 0% 0% 0% 0% 0%
NPV ($/sh) 2.73 - - 0.55 - - -80% na na
Price Target ($/sh) 2.75 0.55 -80%
SOURCE: COMPANY DATA AND BELL POTTER SECURITIES ESTIMATES
Page 9
Resources 20 June 2019
Gold Road Resources Ltd (GOR)
First gold at Gruyere still imminent and regional exploration
The Gruyere Gold Project is still imminent despite a setback from the ball mill issue that
means the full commissioning of the plant and ramp-up to full production is delayed, which
is disappointing but we regard it as quite minor in the overall scheme of things for such a
large Tier 1 gold project. We have slightly reduced our forecast for GOR’s gold production
in 2019 but we expect that although the average all in sustaining cost for 2019 is likely to
be higher than previous guidance, it is mainly a timing issue and could be lower than our
previous estimate. The company recently announced that Gruyere’s life of mine gold
production will be higher than previously forecast and will average around 300kozpa at a
very attractive low average life-of-mine all in sustaining cost of A$1,025/oz and the Gruyere
JV continues to explore opportunities to increase Gruyere’s output above 300kozpa by
possibly steepening the pit, lifting the status of the Inferred Resource in the A$1,850/oz pit
shell and by lifting the Golden Highway Resource and Reserve between existing pits.
GOR continues its active regional exploration program on its very large, 100% owned
Northern and Southern Project Areas with a focus on advanced prospects such as
Gilmour, where work is progressing towards defining a Maiden Resource while also
continuing to carry out early stage and follow-up exploration on multiple target areas.
Investment Thesis – Spec. Hold, Valuation $1.15/sh
With first gold production from Gruyere gold expected by the end of June 2019, the
company’s regional exploration at Yamarna is rightfully getting more attention as GOR is
progressing towards defining a Maiden Resource at Gilmour and progressing other
prospects and targets. While there is still more work to be done at Gilmour to define a
Resource, the company has learnt much about the nature of the regional gold
mineralisation from Gilmour that is directly assisting its work on other advanced regional
prospects. The 19% upside to our valuation of $1.15/share principally reflects the
significant worth of the Gruyere interest where first gold production is imminent at a time of
record A$ gold prices and emerging value is being unlocked by increasingly well informed
ongoing regional exploration. We retain our Speculative Hold rating.
Company description
GOR is a gold development and exploration company whose principal asset is the very
large Yamarna Gold Project (YGP), which covers over 6,000km2 of tenements on the
eastern edge of the Yilgarn Craton in Western Australia, where the company has been
exploring since 2006. GOR has a 50% joint venture interest in the Gruyere Gold Project
(GGP) with Gold Fields being the Manager and holding the other 50% interest. GOR is the
Exploration Manager for the GGP JV. The GGP has a total gold Resource base of 6.6Moz
at an average grade of 1.32g/t made up of 5.8Moz at 1.29g/t at Gruyere and 0.8Moz at
1.48g/t at Golden Highway, YAM 14 and Central Bore. Gruyere and the Golden Highway
have an Ore Reserve of 3.9Moz at an average grade of 1.25g/t. GOR holds a 100%
interest in and is the Manager of the North and South Yamarna regional exploration
projects where it is actively exploring multiple high priority gold camp-sized regional targets
and has been carrying out more detailed evaluation of advanced prospects such as
Gilmour-Morello, Smokebush, Wanderrie and Tamerlane as well as testing new targets as
part of one of the largest greenfields exploration programs in Australia. The company also
has a 6.2% interest in and an earn-in joint venture arrangement with junior gold explorer,
Cygnus Gold Ltd (CY5) relating to gold exploration projects in the south-west of WA.
Page 10
Resources 20 June 2019
Millennium Minerals Ltd (MOY)
On our “red flag” watchlist
MOY recently updated the market on the unexpected drawdown of an 18 month, secured
A$20m debt facility at a 13.5% interest rate from its major shareholder, IMC Group (47%).
Combined with a downgrade of its CY2019 production and cost guidance (to 80-90koz at
an AISC of $1,370-$1,450/oz, from previous guidance of 90-100koz at AISC of A$1,300–
$1,375/oz), MOY is on our “red flag” watchlist. While MOY managed a reasonable
December 2018 quarter and has a history of generating positive operational cash flows, it
also has a track-record of high costs and missing guidance. The most recent delays to the
sulphide circuit expansion at Nullagine and ramp-up of the Bartons underground are
examples of this. Total financing proceeds of $44m in the first 5 months of 2019 compared
with total CAPEX and exploration of ~$18m in the March quarter and an estimated $9m left
to spend on the sulphide expansion (of a total budget of $15m), is a worrying sign. And
while high cost producers are more leveraged to margin expansion in a rising gold price
environment, ~46% of MOY’s production to March 2020 is hedged at A$1,755/oz, limiting
this exposure. Together with technical risk associated with the planned sulphide
processing route and lower-than-forecast grades on a project that already has a high AISC
make MOY one to have very open eyes on.
Investment Thesis – Buy, Target Price $0.12/sh
Following the release of a poor March quarterly, we made the following observation: “MOY
clearly needs to lift operational cash flows and ensure capital spending remains within
budget. With the Investec facility now fully drawn and a rights issue just completed, any
additional financing requirement will send a very negative signal to the market.” MOY’s
unexpected debt drawdown for gross debt of $35m means that, in our view, MOY is
effectively working for the banks for the next 18 months. Combined with the latest
production and cost guidance we see little reason for equity holders to be in the stock until
there is strong evidence of successful delivery of the sulphide expansion and production
increase at Nullagine. We have made no changes to our earnings forecast or target price
of $0.12/sh, but we are compelled to lift our recommendation to Buy, from Hold, on recent
share price depreciation. With this in mind, we do point out that MOY has bought itself
some breathing space and, should it successfully implement its plans, the reward will be
significant from here – commensurate with the risk.
Company description
MOY is a gold exploration and production company whose primary asset is its 100%
owned Nullagine Gold Project, in the Pilbara region of Western Australia. Since
commencing production in 2012, ore feed to the mill has largely consisted of open-pit oxide
material, sourced from multiple deposits across the +40km strike length of MOY’s 280km2
tenement package. The bulk of this however remains largely under-explored due to drilling
having been focussed on shallow extensions to known deposits. This has been successful
in delineating sufficient free-milling oxide Reserves to underpin a 2 year mine life, but has
left much of the landholding effectively untested. Very little drilling outside the main
deposits extends deeper than 150m below surface. MOY is now showing there are
opportunities to expand and monetise the entire Resource base. It has recently confirmed
the technical viability of an expanded processing route to treat refractory sulphide
mineralisation which makes up the majority of its Resource base. These developments
could result in a significant increase to the Resource base, a much higher rate of
conversion to Reserves and a material extension to the life-of-mine (lom) at Nullagine.
Page 11
Resources 20 June 2019
BELL POTTER PRECIOUS METALS COVERAGE
Table 3 - Bell Potter precious metals coverage
SOURCE: BELL POTTER SECURITIES
RRL: RRL is one of our top picks among the ASX-listed gold producers due to its strong balance sheet, low costs, capital
efficient growth and high shareholder returns. Furthermore, we view RRL’s 100%-owned organic growth options as a strategic
advantage vs peers and the McPhillamys development project in NSW as undervalued by the market.
GOR: Gruyere is on track to produce its first gold imminently although the ball mill commissioning is delayed. The Gruyere JV
is working to lift average life-of-mine gold production above 300kozpa. Positive exploration results across GOR’s large
regional tenements confirm it is highly prospective with ongoing work at Gilmour closing in on a Maiden Resource.
DCN: Its A$200m, 2.5Mtpa Mount Morgans Gold Project commenced production in the June quarter of 2018 with commercial
production subsequently declared on January 1, 2019. Originally guiding production and costs for FY19 at 180-210koz and
AISC of ~A$1,000/oz, poor Reserve reconciliations have led to a material downgrade of expectations. DCN most recently
guided 138-140koz for FY19 and gave preliminary FY20 guidance of 150-170koz at AISC of A$1,350/oz-$1,450/oz.
WGX: Is continuing to ramp up output from its three Murchison operations with most ore coming from higher grade
underground mines. Sale of Higginsville operation to RNX makes WGX its largest single shareholder, giving WGX exposure to
RNX’s exciting Beta Hunt mine plus cash to bolster WGX’s financial position, now benefiting from growing free cash flow.
PNR: Offers attractive value as production increases, costs fall, the balance sheet strengthens and exploration success adds
to mine life at the Halls Creek Gold Project. In 2HCY19, the addition of a second underground mine and full utilisation of ore
sorting technology is expected to lift production to 80kozpa. The recent acquisition of a 50% interest in the Central Norseman
Gold Project (CNGP) adds a second high grade project that is well suited to PNR’s skill-set.
MOY: MOY’s primary asset is its 100%-owned Nullagine Gold Project, in the Pilbara region of WA. It has recently commenced
the addition of an expanded processing route to treat refractory sulphide mineralisation which opens up its tenements to
deeper gold exploration. However, technical risk and a poor operational performance have led to a de-rating of the stock.
BRB: Following the release of a maiden Resource of 624koz @ 1.6g/t Au in April 2018, BRB subsequently added 500koz in
the five months to September 2018 for an upgraded Resource of 1.08Moz @ 1.4g/t Au, including a high grade core of 808koz
@ 2.0g/t Au. We remain of the view that Lake Roe is the most compelling greenfields gold discovery in the market.
XAM: Scoping Study on only open pit mineralisation for three outcropping deposits at 76.5% owned flagship Kharmagtai
Copper–Gold Project in Mongolia confirms it economically attractive and capable of being a significant operation processing up
to 20Mtpa after low capex of US$484m. Shallow oxide gold being assessed as possible “starter” project to help funding.
S2R: Recent base of till drilling in Finland has identified a strong gold anomaly at the Aarnivalkea Prospect. Recent drilling at
the Ecru Prospect in Nevada, USA did not reach the target zone but the company has sent samples of the limestone for “bug”
dating to help understand stratigraphy. S2R plans follow-up drilling for nickel at its Taipan North Prospect near Norseman WA.
SVL: Recent approvals will enable expansion of the current drilling program at the Barabolar Project, which contains multiple
porphyry copper-gold and polymetallic targets, to incorporate drilling of the large Cringle anomaly. Results from the early part
of the drilling program are encouraging. SVL continues to advance the Environmental Impact Statement for Bowdens
Prices at 19/06/2019 Market capitalisation Price Target price Recommendation Analyst
Regis Resources Ltd (RRL) $2,367m $4.66/sh $5.40/sh Buy (from Hold) DCGold Road Resources Ltd (GOR) $847m $0.97/sh $1.15/sh Hold (Spec) PADacian Gold Ltd (DCN) $122m $0.54/sh $0.55/sh Hold (Spec) from Buy (Spec) DCWestgold Resources Ltd (WGX) $636m $1.64/sh $1.95/sh Buy PAPantoro Limited (PNR) $178m $0.17/sh $0.35/sh Buy DCMillennium Minerals Ltd (MOY) $51m $0.06/sh $0.12/sh Buy (from Hold) DCBreaker Resources NL (BRB) $63m $0.31/sh $0.84/sh Buy (Spec) DCXanadu Mines (XAM) $34m $0.05/sh $0.55/sh Buy (Spec) PAS2 Resources (S2R) $24m $0.10/sh $0.32/sh Buy (Spec) PASilver Mines Ltd (SVL) $30m $0.04/sh $0.05/sh Hold (Spec) PA
Page 12
Resources 20 June 2019
ASX QUARTERLY PRODUCTION MONITORS
The tables and charts below monitor the quarterly production and cost progress against guidance for the largest ASX gold
producers. The tables show actual production and costs vs the company’s guidance midpoint. Variance vs the midpoint is
highlighted in green or red according to whether the company is tracking ahead of or behind guidance respectively.
Figure 2 – Quarterly production and cost progress: Newcrest Mining (NCM)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 3 – Quarterly production and cost progress: Evolution Mining (EVN)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 4 – Quarterly production and cost progress: Northern Star (NST)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Newcrest Mining (NCM) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 548,351 654,849 623,124 1,826,324
Guidance (midpoint, oz Au) 618,750 618,750 618,750 618,750 2,475,000
Cumulative progress (%) 22.2% 48.6% 73.8% - 73.8%
Costs
AISC (A$/oz) $1,064 $1,004 $1,036 $1,033
Guidance (midpoint, A$/oz) $1,065 $1,065 $1,065 $1,065 $1,065
Variance vs guidance (%) -0.2% -5.7% -2.8% - -3.1%
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657
$1,715
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Evolution Mining (EVN) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 200,218 181,996 175,901 558,115
Guidance (midpoint, oz Au) 186,250 186,250 186,250 186,250 745,000
Cumulative progress (%) 26.9% 51.3% 74.9% - 74.9%
Costs
AISC (A$/oz) $885 $973 $925 $926
Guidance (midpoint, A$/oz) $875 $875 $875 $875 $875
Variance vs guidance (%) 1.1% 11.2% 5.7% - 5.9%
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657$1,715
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Northern Star (NST) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 207,600 193,252 186,255 587,107
Guidance (midpoint, oz Au) 218,750 218,750 218,750 218,750 875,000
Cumulative progress (%) 23.7% 45.8% 67.1% - 67.1%
Costs
AISC (A$/oz) $1,226 $1,365 $1,369 $1,317
Guidance (midpoint, A$/oz) $1,250 $1,250 $1,250 $1,250 $1,250
Variance vs guidance (%) -1.9% 9.2% 9.5% - 5.4%
Production guidance unchanged
Cost guidance increased $75/oz w Mar Qtly
Production as % of guidance
6.4%
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657$1,715
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Page 13
Resources 20 June 2019
Figure 5 – Quarterly production and cost progress: Regis Resources (RRL)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 6 – Quarterly production and cost progress: OceanaGold (OGC)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 7 – Quarterly production and cost progress: St Barbara Mines (SBM)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Regis Resources (RRL) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 90,879 90,487 91,087 272,453
Guidance (midpoint, oz Au) 88,750 88,750 88,750 88,750 355,000
Cumulative progress (%) 25.6% 51.1% 76.7% - 76.7%
Costs
AISC (A$/oz) $923 $985 $1,019 $976
Guidance (midpoint, A$/oz) $1,020 $1,020 $1,020 $1,020 $1,020
Variance vs guidance (%) -9.5% -3.4% -0.1% - -4.3%
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657$1,715
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
OceanaGold (OGC) Mar-19 Jun-19 Sep-19 Dec-19 YTD
Production
Reported production (oz Au) 125,681 125,681
Guidance (midpoint, oz Au) 131,250 131,250 131,250 131,250 525,000
Cumulative progress (%) 23.9% - - - 23.9%
Costs
AISC (A$/oz, BPe*) $1,440 $1,440
Guidance (midpoint, A$/oz) $1,182 $1,182 $1,182 $1,182 $1,182
Variance vs guidance (%) 21.8% - - - 21.8%
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Mar-19 Jun-19 Sep-19 Dec-19
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Mar-19 Jun-19 Sep-19 Dec-19
AISC (A$/oz, BPe*) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
St Barbara (SBM) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 98,547 89,244 88,358 276,149
Guidance (midpoint, oz Au) 92,500 92,500 92,500 92,500 370,000
Cumulative progress (%) 26.6% 50.8% 74.6% - 74.6%
Costs
AISC (A$/oz) $919 $1,108 $1,098 $1,037
Guidance (midpoint, A$/oz) $1,088 $1,088 $1,088 $1,088 $1,088
Variance vs guidance (%) -15.5% 1.9% 1.0% - -4.6%
Production guidance lowered 5koz w Mar Qtly
Cost guidance increased $15/oz w Mar Qtly
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as
% of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657
$1,715$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Page 14
Resources 20 June 2019
Figure 8 – Quarterly production and cost progress: Resolute Mining (RSG)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 9 – Quarterly production and cost progress: Saracen Mineral Holdings (SAR)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 10 – Quarterly production and cost progress: Westgold Resources (WGX)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Resolute Mining (RSG) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 55,508 73,691 98,105 227,304
Guidance (midpoint, oz Au) 75,000 75,000 75,000 75,000 300,000
Cumulative progress (%) 18.5% 43.1% 75.8% - 75.8%
Costs
AISC (A$/oz) $1,560 $1,360 $1,039 $1,270
Guidance (midpoint, A$/oz) $1,280 $1,280 $1,280 $1,280 $1,280
Variance vs guidance (%) 21.9% 6.3% -18.8% - -0.8%
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657
$1,715
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Saracen (SAR) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 88,940 88,833 89,208 266,981
Guidance (midpoint, oz Au) 88,750 88,750 88,750 88,750 355,000
Cumulative progress (%) 25.1% 50.1% 75.2% - 75.2%
Costs
AISC (A$/oz) $993 $1,067 $1,035 $1,032
Guidance (midpoint, A$/oz) $1,075 $1,075 $1,075 $1,075 $1,075
Variance vs guidance (%) -7.6% -0.7% -3.7% - -4.0%
Production guidance increased by 20.0koz Jan-19
Cost guidance unchanged
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657 $1,715
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Westgold (WGX) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 61,037 60,064 67,168 188,269
Guidance (midpoint, oz Au) 77,500 77,500 77,500 77,500 310,000
Cumulative progress (%) 19.7% 39.1% 60.7% - 60.7%
Costs
AISC (A$/oz) $1,552 $1,501 $1,269 $1,435
Guidance (midpoint, A$/oz) $1,325 $1,325 $1,325 $1,325 $1,325
Variance vs guidance (%) 17.1% 13.3% -4.2% - 8.3%
Production guidance lowered by 20.0koz Jan-19
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657 $1,715
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Page 15
Resources 20 June 2019
Figure 11 – Quarterly production and cost progress: Ramelius Resources (RMS)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 12 – Quarterly production and cost progress: Millennium Minerals (MOY)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Figure 13 – Quarterly production and cost progress: Silver Lake Resource (SLR)
SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES
Ramelius (RMS) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 51,428 52,623 45,286 149,337
Guidance (midpoint, oz Au) 50,000 50,000 50,000 50,000 200,000
Cumulative progress (%) 25.7% 52.0% 74.7% - 74.7%
Costs
AISC (A$/oz) $1,253 $1,190 $1,210 $1,218
Guidance (midpoint, A$/oz) $1,200 $1,200 $1,200 $1,200 $1,200
Variance vs guidance (%) 4.4% -0.8% 0.8% - 1.5%
Production guidance decreased by 10.0koz w Dec Qtly
Cost guidance narrowed but unchanged
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657
$1,715$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Millennium Minerals (MOY) Mar-19 Jun-19 Sep-19 Dec-19 YTD
Production
Reported production (oz Au) 17,393 17,393
Guidance (midpoint, oz Au) 21,250 21,250 21,250 21,250 85,000
Cumulative progress (%) 20.5% - - - 20.5%
Costs
AISC (A$/oz, BPe*) $1,576 $1,576
Guidance (midpoint, A$/oz) $1,410 $1,410 $1,410 $1,410 $1,410
Variance vs guidance (%) 11.8% - - - 11.8%
Production guidance dropped 10koz and cost guidance raisedA$72.50/oz May-19
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Mar-19 Jun-19 Sep-19 Dec-19
$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Mar-19 Jun-19 Sep-19 Dec-19
AISC (A$/oz, BPe*) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Silver Lake (SLR) Sep-18 Dec-18 Mar-19 Jun-19 YTD
Production
Reported production (oz Au) 32,095 34,871 35,172 102,138
Guidance (midpoint, oz Au) 36,250 36,250 36,250 36,250 145,000
Cumulative progress (%) 22.1% 46.2% 70.4% - 70.4%
Costs
AISC (A$/oz) $1,469 $1,464 $1,444 $1,459
Guidance (midpoint, A$/oz) $1,370 $1,370 $1,370 $1,370 $1,370
Variance vs guidance (%) 7.2% 6.9% 5.4% - 6.5%
Production as % of guidance
0% 25% 50% 75% 100% 125%
Production as %
of guidance
Sep-18 Dec-18 Mar-19 Jun-19
$1,657
$1,715$1,829
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Sep-18 Dec-18 Mar-19 Jun-19
AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)
Page 16
Resources 20 June 2019
GOLD EQUITIES – PRODUCERS COMPS TABLE
Co
mp
an
y
AS
X
Co
de
Pri
ce
(A$/s
h)
Ma
rket
Ca
p
(A$
m)
Ne
t
Cash
/(D
eb
t)
(A$m
)E
V (
A$
m)
Cu
rren
t
pro
du
cti
on
rate
(k
ozp
a)
La
test
AIS
C
(A$
/oz)
AIS
C
ma
rgin
(A$/o
z)
Imp
lied
AIS
C
ma
rgin
(A
$m
pa)
EV
/AIS
C
marg
in
x
To
tal
hed
ge
d
(ko
z)
Av
g h
ed
ged
pri
ce (
A$
/oz)
Ma
rk-t
o-
mark
et
(A$m
)
Net
cas
h
(de
bt)
/
Mkt
Ca
p
New
cre
st M
inin
g L
imited
NC
M$
30
.54
$23
,46
9.2
-$1
,39
4.6
$24
,86
3.8
2,4
92
$1
,03
6$91
9$
2,2
90
.41
0.9
x8
71
.1
$1,8
36
-$10
3.6
-5.9
%
Evolu
tio
n M
inin
g L
imited
EV
N$4
.08
$6
,92
4.0
-$7
4.1
$6
,99
8.1
704
$92
5$1
,03
0$7
24
.69.7
x4
37
.5
$1,8
26
-$5
6.4
-1.1
%N
ort
he
rn S
tar
Resourc
es L
tdN
ST
$10
.70
$6
,84
3.6
$28
8.0
$6
,55
5.6
745
$1
,36
9$58
6$4
36
.515
x1
96
.4
$1,7
96
-$3
1.2
4.2
%
Sara
ce
n M
inera
l H
old
ing
s L
imite
dS
AR
$3
.59
$2
,94
5.3
$15
3.3
$2
,79
2.0
357
$1
,03
5$92
0$3
28
.38.5
x3
58
.5
$1,7
92
-$5
8.4
5.2
%O
cea
naG
old
Corp
ora
tion
OG
C$4
.32
$2
,67
1.5
-$14
4.3
$2
,81
5.7
503
$1
,44
0$51
5$2
58
.91
0.9
x1
26
.9
$1,8
10
$0.0
-5.4
%
Regis
Re
so
urc
es L
imite
dR
RL
$4
.66
$2
,36
6.7
$18
6.6
$2
,18
0.1
364
$1
,01
9$93
6$3
41
.06.4
x4
38
.3
$1,5
92
-$15
9.1
7.9
%S
t B
arb
ara
Lim
ited
SB
M$2
.67
$1
,85
7.4
$38
2.0
$1
,47
5.4
353
$1
,09
8$85
7$3
02
.94.9
x1
77
.0
$1,8
06
-$2
6.3
20
.6%
SLR
+ D
RM
pro
-form
a-
$0
.00
$1,1
21.5
$12
3.9
$99
7.6
225
$1
,34
6$6
09
$1
36
.77.3
x1
69
.9
$1,7
57
-$3
3.6
11
.0%
Silv
er
Lake R
esourc
es L
imited
SL
R$1
.06
$86
7.3
$10
8.5
$75
8.8
141
$1
,44
4$51
1$
71
.91
0.6
x1
27
.4
$1,7
58
-$2
5.1
12
.5%
Resolu
te M
inin
g L
imite
dR
SG
-$81
8.7
-$9
9.4
$91
8.1
392
$1
,03
9$91
6$3
59
.42.6
x1
56
.0
$1,8
28
-$1
9.7
-12
.1%
Westg
old
Re
so
urc
es L
imited
WG
X$1
.64
$63
6.2
$1
3.4
$62
2.8
269
$1
,26
9$68
6$1
84
.33.4
x1
50
.0
$1,7
94
-$2
4.1
2.1
%
Pers
eu
s M
inin
g L
imited
PR
U$0
.50
$58
3.7
$5
2.8
$53
0.9
269
$1
,19
4$76
1$2
04
.32.6
x78
.5
$
1,8
92
-$4.9
9.0
%
Ram
eliu
s R
eso
urc
es L
imited
RM
S$0
.66
$43
4.2
$10
4.7
$32
9.5
181
$1
,21
0$74
5$1
34
.92.4
x2
03
.3
$1,7
90
-$3
3.5
24
.1%
Aure
lia M
eta
ls L
imited
AM
I$0
.47
$41
0.1
$10
8.6
$30
1.5
93
$1
,30
2$65
3$
60
.94.9
x56
.0
$
1,7
54
-$1
1.3
26
.5%
Dora
y M
inera
ls L
imite
dD
RM
$0
.56
$25
4.2
$1
5.4
$23
8.8
84
$1
,18
2$77
3$
64
.83.7
x42
.5
$
1,7
54
-$8.5
6.1
%R
ed 5
Lim
ite
dR
ED
$0
.17
$21
1.3
$1
3.5
$19
7.8
97
$1
,63
7$31
8$
30
.86.4
x29
.7
$
1,7
91
-$4.9
6.4
%
Pan
toro
Lim
ited
(ex-C
NG
P)
PN
R$0
.17
$17
7.5
$2
3.2
$15
4.3
45
$1
,21
7$73
8$
33
.34.6
x24
.0
$
1,7
73
-$4.4
13
.1%
Dacia
n G
old
Lim
ited
DC
N$0
.55
$12
3.0
-$5
3.3
$17
6.3
140
$1
,48
8$46
7$
65
.42.7
x1
55
.1
$1,7
66
-$2
9.3
-43
.3%
Med
usa M
inin
g L
imited
MM
L$0
.50
$10
3.9
$2
8.6
$7
5.2
119
$1
,31
8$63
7$
76
.11
x-
na
na
27
.6%
Mill
en
niu
m M
ine
rals
Lim
ite
dM
OY
$0
.06
$5
0.8
$3.6
$4
7.2
70
$1
,57
6$37
9$
26
.41.8
x42
.9
$
1,7
55
-$8.6
7.1
%
Tro
y R
esou
rce
s L
imite
dT
RY
$0
.08
$4
9.7
$2.1
$4
7.6
53
$1
,73
9$21
6$
11
.54.1
x-
$0
$0.0
4.3
%B
lackha
m R
eso
urc
es L
imited
BL
K$0
.01
$2
7.9
-$1
8.7
$4
6.6
61
$1
,75
7$19
8$
12
.13.9
x33
.5
$
1,7
85
-$5.7
-66
.9%
Av
era
ge
$1
,30
2$65
35.8
x
RE
SO
UR
CE
AN
D R
ES
ER
VE
OU
NC
E V
AL
UA
TIO
NS
CH
AN
GE
IN
NE
T C
AS
H (
DE
BT
) Q
oQ
to
Mar-
19
Co
mp
an
y
AS
X
Co
de
Reso
urc
es
(Mo
zs
)
Gra
de
(g/t
Au
)
EV
/ R
es o
z
(A$/o
z)
Re
se
rve
s
(Mo
zs)
Gra
de
(g/t
Au
)
EV
/Rs
v o
z
(A$
/oz)
Co
mp
an
y
AS
X
Co
de
Ne
t
Ca
sh
/(D
eb
t)
(A$m
)
Ch
an
ge
qo
q (
A$m
)
Ch
an
ge
A$/o
z
New
cre
st M
inin
g L
imited
NC
M11
0.0
1.4
0$2
26
62.0
1.3
9
$40
1S
t B
arb
ara
Lim
ited
SB
M$
38
2.0
$3
9.0
$4
41
Evolu
tio
n M
inin
g L
imited
EV
N1
4.7
0.8
4$4
75
7.5
0
.80
$93
8P
ers
eus M
inin
g L
imite
dP
RU
$5
2.8
$2
9.1
$4
33
Nort
he
rn S
tar
Resourc
es L
tdN
ST
20.5
3.4
0$3
21
4.0
3
.80
$1
,63
9M
edu
sa
Min
ing L
imite
dM
ML
$2
8.6
$8.1
$2
71
Sara
ce
n M
inera
l H
old
ing
s L
imite
dS
AR
8.6
1.8
0$3
25
2.5
1
.90
$1
,11
7R
eg
is R
esourc
es L
imitedR
RL
$18
6.6
$2
0.5
$2
25
Ocea
naG
old
Corp
ora
tion
OG
C1
2.2
1.5
2$2
31
5.6
1
.36
$50
6P
anto
ro L
imite
d (
ex-C
NG
P)
PN
R$2
3.2
$2.4
$2
13
Regis
Re
so
urc
es L
imite
dR
RL
7.9
0.9
6$2
77
4.1
1
.08
$53
6W
estg
old
Resou
rces L
imited
WG
X$1
3.4
$1
1.2
$1
66
St B
arb
ara
Lim
ited
SB
M9.2
2.9
0$1
61
3.9
3
.90
$37
6D
ora
y M
inera
ls L
imited
DR
M$1
5.4
$3.3
$1
57
SLR
+ D
RM
pro
-form
a-
4.5
4.5
8$
221
0.8
3.7
1
$1
,28
6E
volu
tion
Min
ing L
imite
dE
VN
-$7
4.1
$2
6.6
$1
51
Silv
er
Lake R
esourc
es L
imited
SL
R3.7
3.7
0$2
04
0.5
3
.10
$1
,44
3S
LR
+ D
RM
pro
-form
a-
$12
3.9
$7.5
$1
34
Resolu
te M
inin
g L
imite
dR
SG
16.6
1.5
0$55
5.7
1
.50
$16
1N
ew
cre
st
Min
ing
Lim
ited
NC
M-$
1,3
94.6
$16
3.6
$1
31
Westg
old
Re
so
urc
es L
imited
WG
X1
1.3
2.0
8$55
3.0
2
.39
$20
6S
ara
cen M
ine
ral H
old
ings L
imited
SA
R$
15
3.3
$1
0.7
$1
20
Pers
eu
s M
inin
g L
imited
PR
U7.0
1.2
1$76
3.5
1
.49
$15
3S
ilver
La
ke
Resou
rce
s L
imite
dS
LR
$10
8.5
$4.2
$1
19
Ram
eliu
s R
eso
urc
es L
imited
RM
S4.5
1.5
8$73
0.7
1
.60
$47
2T
roy
Re
so
urc
es L
imited
TR
Y$
2.1
$0.9
$64
Aure
lia M
eta
ls L
imited
AM
I0.9
1.6
6$3
29
0.3
3
.33
$89
2A
ure
lia M
eta
ls L
imited
AM
I$
10
8.6
$0.7
$30
Dora
y M
inera
ls L
imite
dD
RM
0.8
8.7
0$2
99
0.3
5
.00
$95
5N
ort
hern
Sta
r R
esou
rce
s L
tdN
ST
$28
8.0
-$5.7
-$31
Red 5
Lim
ite
dR
ED
5.2
2.6
7$38
1.3
1
.81
$15
7R
ed
5 L
imited
RE
D$1
3.5
-$1.1
-$45
Pan
toro
Lim
ited
(ex-C
NG
P)
PN
R0.4
8.3
0$3
73
0.3
7
.10
$45
5R
esolu
te M
inin
g L
imited
-$9
9.4
-$4.6
-$47
Dacia
n G
old
Lim
ited
DC
N3.5
2.0
0$50
1.4
1
.60
$12
7R
am
eliu
s R
esourc
es L
imited
RM
S$
10
4.7
-$3.4
-$75
Med
usa M
inin
g L
imited
MM
L1.4
3.8
6$55
0.4
6
.86
$21
5D
acia
n G
old
Lim
ite
dD
CN
-$5
3.3
-$5.4
-$1
54
Mill
en
niu
m M
ine
rals
Lim
ite
dM
OY
1.2
1.6
0$41
0.4
1
.64
$12
6B
lackh
am
Resou
rces L
imited
BLK
-$1
8.7
-$2.6
-$1
70
Tro
y R
esou
rce
s L
imite
dT
RY
0.9
2.1
0$51
0.1
2
.43
$40
0O
ce
ana
Gold
Corp
ora
tionO
GC
-$14
4.3
-$4
6.4
-$3
69
Bla
ckha
m R
eso
urc
es L
imited
BL
K6.7
2.1
6$7
1.5
1
.80
$3
0M
ille
nn
ium
Min
era
ls L
imited
MO
Y$
3.6
-$1
1.1
-$6
38
Av
era
ge
$1
79
$57
2
SO
UR
CE
: IR
ES
S,
CO
MP
AN
Y R
EP
OR
TS
, B
ELL P
OT
TE
R E
ST
IMA
TE
SP
riced a
s a
t:19/0
6/2
019
AIS
C m
arg
in:
marg
in b
etw
een A
ISC
and A
$ s
pot
gold
price
Pro
duction is g
old
ounces o
nly
, by-
pro
duct cre
dits a
re a
ccounte
d f
or
in A
ISC
Implie
d A
ISC
marg
in =
AIS
C m
arg
in x
annualis
ed p
roduction.
Is a
n e
stim
ate
only
NO
TE
:T
his
pure
lym
ea
sure
schanges
innet
cash
(debt)
qoq
net
of
equ
ityra
isin
gin
flow
sand
div
idend
paym
ent
outf
low
sove
rgold
ounces
pro
duced.
There
fore
,ove
rand
above
cash
ou
tflo
ws
measure
dby
the
AIS
C,
itw
illals
ocaptu
recapital
investm
ents
inn
ew
pro
jects
,debt
repaym
ents
/dra
wdow
ns,
asset
acquis
itio
ns
and
div
estm
ents
,gold
forw
ard
sale
s,
tim
ing
of
sale
s,
cash
tax
paym
ents
and
oth
er
one-o
ffitem
sim
pacting
qu
art
erly
cash
move
ments
ove
r
an
dabove
the
ongoin
gopera
tions.
Com
pan
ies
with
by-p
roducts
have
cash
changes
measure
d o
ver
gold
ounces o
nly
, exa
ggera
ting t
his
metr
ic.
Page 17
Resources 20 June 2019
GOLD EQUITIES – EXPLORERS COMPS TABLE
Co
mp
an
y
AS
X
Co
de
Pri
ce
(A$
/sh
)
Ma
rket
Ca
p
(A$m
)
Ne
t
Ca
sh
/(D
eb
t)
(A$m
)E
V (
A$
m)
Re
so
urc
es
(Mo
zs
)
Gra
de
(g/t
Au
)
EV
/ R
es
oz
(A$
/oz)
Re
serv
es
(Mo
zs
)
Gra
de
(g/t
Au
)
EV
/Rs
v o
z
(A$/o
z)
Net
cas
h
(de
bt)
/
Mkt
Ca
p
Go
ld R
oad
Re
so
urc
es L
imited
GO
R$
0.9
7$8
53.8
$4
9.0
$8
04.8
3.3
10
1.3
2$
243
2.0
1.2
5
$4
11
5.7
%
Belle
vu
e G
old
Lim
ited
BG
L$
0.6
6$3
29.3
$2
8.7
$3
00.6
1.5
30
11
.80
$1
96
-
-
n
a8
.7%
West A
fric
an R
esou
rce
s L
imite
dW
AF
$0
.29
$2
52.1
$3
7.2
$2
14.9
3.0
89
1.7
7$
70
1.7
2.4
0
$1
30
14
.8%
Cata
lyst
Me
tals
Lim
ited
CY
L$
2.0
1$1
58.6
$1
6.7
$1
41.9
0.0
00
0.0
0na
-
-
n
a10
.5%
Card
ina
l R
eso
urc
es L
imited
CD
V$
0.3
3$1
24.4
-$1
1.4
$1
35.8
6.9
90
1.1
3$
19
5.1
1.1
3
$
27
-9.1
%
Van
go M
inin
g L
imite
dV
AN
$0
.17
$9
8.7
-$1
0.2
$1
08.9
0.4
10
8.0
0$
266
-
-
n
a-1
0.3
%
Ech
o R
eso
urc
es L
imite
dE
AR
$0
.15
$1
00.2
$1
9.0
$8
1.2
1.6
73
1.9
0$
49
0.8
1.6
0
$
99
19
.0%
Cap
rico
rn M
eta
ls L
tdC
MM
$0
.09
$7
9.6
$1
2.0
$6
7.6
1.5
25
0.9
0$
44
0.9
1.0
0
$
76
15
.1%
Bard
oc G
old
Lim
ited
BD
C$
0.0
5$
63.8
$8
.6$
55.2
2.5
75
2.1
0$
21
-
-
n
a13
.5%
IRC
+M
RP
pro
-fo
rma
-$0
.00
$63
.8$
6.7
$57
.11
.17
41.5
5$
49
-
-
na
10
.4%
Bre
ake
r R
eso
urc
es N
LB
RB
$0
.31
$6
3.1
$9
.6$
53.5
1.0
84
1.4
0$
49
-
-
n
a15
.2%
Ta
nam
i G
old
NL
TA
M$
0.0
4$
48.2
$2
8.3
$1
9.9
1.6
46
2.8
0$
12
-
-
n
a58
.7%
Pro
dig
y G
old
NL
PR
X$
0.0
9$
43.3
$5
.2$
38.1
1.0
10
2.0
0$
38
-
-
n
a12
.0%
Inte
rmin
Re
so
urc
es L
imite
dIR
C$
0.1
0$
42.4
$5
.6$
36.8
0.6
67
2.0
0$
55
-
-
n
a13
.2%
De G
rey
Min
ing
Lim
ite
dD
EG
$0
.08
$3
5.5
$3
.2$
32.3
1.3
93
1.6
0$
23
-
-
n
a9
.0%
Calid
us R
esou
rce
s L
imited
CA
I$
0.0
3$
30.8
$3
.0$
27.8
1.2
50
1.8
3$6
-
-
n
a9
.7%
Ega
n S
tre
et R
esou
rce
s L
imite
dE
GA
$0
.23
$3
0.0
$4
.5$
25.5
0.4
54
9.2
0$
56
0.2
4.4
0
$1
28
15
.0%
Ge
ne
sis
Min
era
ls L
imited
GM
D$
0.0
2$
25.1
$4
.4$
20.7
0.7
60
3.3
0$
27
-
-
n
a17
.6%
Nusa
nta
ra R
eso
urc
es L
imite
dN
US
$0
.18
$2
4.9
$1
0.4
$1
4.5
2.0
00
1.3
8$7
1.1
1.3
2
$
13
41
.8%
Ma
cp
hers
on
s R
eso
urc
es L
imite
dM
RP
$0
.06
$2
1.4
$1
.1$
20.4
0.5
07
0.9
6$
40
-
-
n
a4
.9%
Mu
sg
rave
Min
era
ls L
imite
dM
GV
$0
.05
$2
0.1
$5
.1$
15.0
0.4
41
2.8
4$
34
-
-
n
a25
.4%
Art
em
is R
eso
urc
es L
imite
dA
RV
$0
.03
$2
0.5
-$3
.3$
23.8
0.2
60
1.0
6$
92
-
-
n
a-1
6.1
%D
uketo
n M
inin
g L
imite
dD
KM
$0
.12
$1
4.2
$3
.7$
10.5
0.0
96
1.5
5$
109
-
-
n
a26
.1%
Ausgo
ld L
imited
AU
C$
0.0
1$
10.5
$1
.5$
9.0
1.0
38
1.2
9$9
-
-
n
a14
.3%
Mid
dle
Isla
nd
Re
sou
rce
s L
imite
dM
DI
$0
.01
$5.2
$1
.4$
3.8
0.5
03
1.4
0$8
-
-
n
a26
.7%
To
tal /
av
era
ge
$2
,55
9.4
35
.385
2.2
$63
11.8
1.4
$1
26
SO
UR
CE
: IR
ES
S,
CO
MP
AN
Y R
EP
OR
TS
, B
ELL P
OT
TE
R E
ST
IMA
TE
SP
riced a
s a
t:19/0
6/2
019
Page 18
Resources 20 June 2019
GOLD EQUITIES – PERFORMANCE HEAT MAP
With reference to our front page chart, we think it is worth repeating the performance of the gold equites versus the broader
market over the last few years: The ASX Gold Index gained 11% in CY18, 21% in CY17, 54% in CY16 and 29% in CY15 (vs -
7%, +7%, +7% and -2% respectively for the ASX200,).
We had previously written that we expected share price performance to trickle down in to the smaller names and we were
seeing signs of this in the March 2019 quarter. However, with the failures and negative surprises that have emerged among
this group, the performance has fallen away as the market has balked and applied higher risk discounts. We are of the view
that the opportunity remains to make good returns from the mid-cap names on a selective basis, i.e. where there are good
management teams in place backed by solid balance sheets and assets that are delivering to expectations.
Figure 14 – ASX gold equities heat map of rolling share price performance
SOURCE: IRESS, BELL POTTER SECURITIES ESTIMATES
This list was sorted by market capitalisation as at February 2018.
3 months 3 months 3 months 3 months 3 months 12 months
Stock to Jun-2018 to Sep-2018 to Dec-2018 to Mar-2019 to Jun-2019 to Jun-2019
US$ gold -2% -7% 3% 5% -1% 0%
A$ gold 2% -2% 3% 7% 4% 12%
XGD 4% -9% 12% 16% 6% 25%
NCM 2% -7% 10% 20% 15% 43%
EVN 17% -23% 25% 10% 9% 17%
NST -5% 29% 3% 8% 9% 57%
RRL 7% -19% 9% 26% -16% -7%
OGC 1% 15% -1% 19% -15% 16%
SBM 13% -24% 24% 0% -40% -43%
SAR 21% -19% 58% 2% 23% 61%
RSG 5% -17% 0% 13% -11% -17%
GOR -13% -13% -1% 43% 10% 35%
WGX 14% -24% -33% 33% 37% -8%
DCN -10% -19% -10% 36% -84% -84%
PRU 2% -22% 9% 28% 0% 8%
AMI 46% 17% 13% 30% -42% -2%
WAF -17% -6% -19% 10% 17% -2%
RMS 24% -22% 1% 54% 24% 51%
PNR 0% -31% 0% 17% -23% -37%
CDV -19% 3% -12% -11% -13% -29%
GCY 2% -44% -60% -13% -60% -92%
SLR 62% -18% 4% 53% 11% 44%
BDR -30% -31% -2% 5% 41% 0%
MOY -7% 8% -19% -2% -63% -68%
EAR -11% -53% -8% 89% -29% -41%
ARV 0% 0% -35% -53% -32% -79%
DRM 15% 2% 13% 42% 13% 85%
RED 25% -26% 28% 69% 19% 91%
MML 6% -44% -11% 27% 19% -25%
BRB -56% 34% -3% 32% -28% 24%
TRY 41% -15% 9% -17% -1% -24%
AWV -30% -60% -50% 100% -44% -78%
BSR 50% -10% 0% -5% -6% -19%
PRX -7% -3% -26% 17% 12% -6%
CAI -7% -18% -9% 0% -7% -31%
BLK -24% -44% 5% -36% -64% -86%
KSN 10% 0% -23% 18% -29% -36%
RTG -21% -5% 19% -24% -21% -32%
Average 3% -15% -3% 18% -11% -9%
Page 19
Resources 20 June 2019
GOLD IN CHARTS - PRICES
Both the US$ and A$ gold prices have maintained momentum after breaking out in mid–December 2018. It could be argued
they are looking a little toppy but we reckon it looks more like consolidation before maybe going again. The US$ gold price is
at the top of its range and 200dma’s don’t look too extended. The A$ gold price has benefitted from a weakening currency and
after making new all-time highs in January and February has trucked on to trade as high as A$1,977/oz this week.
Figure 15 – Rolling 2yr US$ gold price and 200dma divergence Figure 16 – Rolling 2yr A$ gold price and 200dma divergence
SOURCE: IRESS, BELL POTTER ESTIMATES SOURCE: IRESS, BELL POTTER ESTIMATES
Silver has seen some positive sentiment but remains range-bound. We view this as an indication that we are still in the
relatively early stages of market momentum shifting towards gold and silver. In a strong bull market we would expect to see
silver outperforming gold.
Figure 17 – Rolling 2yr US$ silver price and 200dma divergence Figure 18 – Rolling 2yr A$ silver price and 200dma divergence
SOURCE: IRESS, BELL POTTER ESTIMATES SOURCE: IRESS, BELL POTTER ESTIMATES
The gold:silver ratio is a key measure of bullish sentiment, in our view, and the trend of gold outperformance has continued,
hitting a +25yr high at >90:1 vs the 10yr average of 66:1. Gold has recovered from fresh +10-year lows vs the DJIA in Sep-18,
but mean reversion on both these metrics points to significant potential outperformance.
Figure 19 – Gold:Silver ratio (10 years) Figure 20 – Gold vs DJIA (10 years)
SOURCE: IRESS, BELL POTTER ESTIMATES SOURCE: IRESS, BELL POTTER ESTIMATES
-10%
10%
30%
50%
70%
90%
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
$1,400
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
% from 200dma US$gold 100dma 50dma
-10%
10%
30%
50%
70%
90%
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
$1,800
$1,900
$2,000
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
% from 200dma A$gold 100dma 50dma
-10%
10%
30%
50%
70%
90%
$10
$11
$12
$13
$14
$15
$16
$17
$18
$19
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
% from 200dma US$silver 100dma 50dma
-10%
10%
30%
50%
70%
90%
$14
$15
$16
$17
$18
$19
$20
$21
$22
$23
$24
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
% from 200dma A$ silver 100dma 50dma
20
30
40
50
60
70
80
90
100
Gold/Silver Avg
0
2
4
6
8
10
12
14
16
18
Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19
Gold/DJIA Avg
Page 20
Resources 20 June 2019
GOLD IN CHARTS – EQUITY PERFORMANCE AND INDICATORS
The charts below monitor the performance of gold equities vs gold bullion. Relative outperformance of the equities is, in our
view, a good indicator of positive sentiment. We can see some clear differences here – the large-cap dominated GDX is
showing clear outperformance of the smaller-cap GDXJ, and the ASX-Gold Index (XGD) has maintained clear outperformance
of both, making a new high relative to the A$ gold price just this week.
Figure 21 – Relative performance: GDX vs US$ gold Figure 22 – Relative performance: GDXJ vs US$ gold
SOURCE: IRESS, BELL POTTER ESTIMATES SOURCE: IRESS, BELL POTTER ESTIMATES
Renewed interest in gold ETF holdings has been shown, after peaking in January 2019 – helpful for sentiment.
Figure 23 – Relative performance: XGD vs A$ gold Figure 24 – Total known ETF gold holdings
SOURCE: IRESS, BELL POTTER ESTIMATES SOURCE: BLOOMBERG
Real interest rates (as measured by US 5yr TIPS) rolled over in early January and increasingly held views of a dovish
monetary policy outlook and soft inflation data have seen them fall back to 12-month lows. However, the recent bounce in the
US$ gold price seems to have been driven more by the safe-haven trade and we still think there is some catching up for it do
vs much lower real interest rates and a weak inflation outlook.
Figure 25 – US Treasury 5yr Inflation Protected Securities Figure 26 – US$ Index (DXY)
SOURCE: BLOOMBERG SOURCE: BLOOMBERG
1.25
1.50
1.75
2.00
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
GDX vs US$ Gold
1.5
2.0
2.5
3.0
3.5
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
GDXJ vs US$ Gold
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
XGD vs A$ Gold
40,000
45,000
50,000
55,000
60,000
65,000
70,000
75,000
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
ko
z A
u
Global gold ETF holdings
-0.60%
-0.40%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
US 5yr TIPS
80
82
84
86
88
90
92
94
96
98
100
Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
US$ Index (DXY)
Page 21
Resources 20 June 2019
Resource sector risks
Risks to MOY include, but are not limited to:
- Funding and capital management risks. Funding and capital management risks can
include access to debt and equity finance, maintaining covenants on debt finance,
managing dividend payments and managing debt repayments.
- Operating and development risks. Mining companies’ assets are subject to risks
associated with their operation and development. Risks for each company can be
heightened depending on method of operation (e.g. underground versus open pit
mining) or whether it is a single mine company. Development of mining assets may be
subject to receiving permits, approvals timelines or weather events, causing delays to
commissioning and commercial production.
- Operating and capital cost fluctuations. Markets for exploration, development and
mining inputs can fluctuate widely and cause significant differences between planned
and actual operating and capital costs. Key operating costs are linked to energy and
labour costs as well as access to, and availability of, technical skills, operating
equipment and consumables.
- Commodity price and exchange rate fluctuations. The future earnings and
valuations of exploration, development and operating resource companies are subject
to fluctuations in underlying commodity prices and foreign currency exchange rates.
- Resource growth and mine life extensions. The viability of future operations and
earnings forecasts and valuations reliant upon them may depend upon resource and
reserve growth to extend mine lives.
- Regulatory changes risks. Changes to the regulation of infrastructure and taxation
(among other things) can impact the earnings and valuation of mining companies.
- Corporate/M&A risks. Risks associated with M&A activity including differences
between the entity’s and the market’s perception of value associated with completed
transactions.
Page 22
Resources 20 June 2019
Regis Resources (RRL) as at 20 June 2019
Recommendation Buy
Price $4.66
Target (12 months) $5.40
Table 4 - Financial summary
SOURCE: BELL POTTER SECURITIES ESTIMATES
SOURCE: BELL POTTER SECURITIES ESTIMATES
PROFIT AND LOSS FINANCIAL RATIOS
Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e
Revenue $m 547.2 607.8 639.9 706.5 771.2 VALUATION
Operating expenses $m (293.2) (294.5) (324.9) (363.8) (390.5) NPAT $m 138.2 174.2 170.0 196.9 196.7
Exploration $m (0.8) (0.9) (9.0) (8.2) (8.2) Basic EPS c/sh 26.6 34.6 33.9 39.3 39.3
EBITDA $m 253.2 312.4 306.1 334.6 372.6 Basic EPS growth % 23% 25% -2% 16% 0%
Depreciation and amortisation $m (57.5) (64.3) (65.4) (67.8) (73.0) Adjusted EPS c/sh 27.6 34.6 33.9 39.3 39.3
EBIT $m 195.7 248.1 240.7 266.8 299.5 Adjusted EPS growth % 23% 26% -2% 16% 0%
Net interest expense/income $m 0.4 0.8 4.4 5.8 7.3 PER x 17.5x 13.5x 13.7x 11.9x 11.9x
PBT $m 196.1 248.9 245.1 272.5 306.9 DPS c/sh 15 16 20 24 24
Tax expense $m (58.0) (74.7) (75.1) (75.7) (110.2) Franking % 100% 100% 100% 100% 100%
NPAT adjusted $m 138.2 174.2 170.0 196.9 196.7 Yield % 3.2% 3.4% 4.3% 5.2% 5.2%
Adjustments $m 4.9 0.1 - - - FCF/share c/sh 20 28 27 30 53
NPAT reported $m 133.2 174.1 170.0 196.9 196.7 P/CFPS x 23.4x 16.6x 17.0x 15.3x 8.8x
EV/EBITDA x 8.6x 7.0x 7.1x 6.5x 5.9x
CASH FLOW EBITDA margin % 46% 51% 48% 47% 48%
Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e EBIT margin % 36% 41% 38% 38% 39%
OPERATING CASHFLOW Return on assets % 22% 23% 20% 21% 19%
Receipts $m 540.0 608.2 639.1 705.6 771.1 Return on equity % 27% 30% 24% 25% 23%
Payments $m (300.4) (314.8) (350.4) (354.3) (390.3) LIQUIDITY & LEVERAGE
Tax $m (36.2) (36.9) (75.1) (75.7) (110.2) Net debt (cash) $m (142.0) (201.4) (239.1) (272.1) (420.1)
Net interest $m 1.4 2.0 4.4 5.8 7.3 ND / E % -26% na na na na
Other $m 1.3 1.2 0.0 0.0 0.0 ND / (ND + E) % -36% na na na na
Operating cash flow $m 206.1 259.7 218.0 281.5 278.0 EBITDA / Interest x na na na na na
INVESTING CASHFLOW
Capex - Property, plant & equipment $m (23.4) (37.5) (46.5) (79.0) 0.0 ASSUMPTIONS - Production & costs
- Mine properties $m (40.3) (31.9) 0.0 0.0 0.0 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e
- Mine development $m (9.5) (14.1) (23.3) (39.5) 0.0 Gold production
- Exploration & evaluation $m (35.7) (33.9) (9.0) (8.2) (8.2) Duketon Northern koz 100.9 106.9 102.9 90.9 90.9
- Total $m (108.9) (117.4) (78.7) (126.6) (8.2) Duketon Southern koz 223.5 254.4 264.0 289.9 319.4
Intangible assets $m 0.0 (0.1) 0.0 0.0 0.0 McPhillamys koz
Other $m 4.2 0.0 0.0 0.0 0.0 Total koz 324.4 361.4 366.9 380.8 410.3
Investing cash flow $m (104.8) (117.6) (78.7) (126.6) (8.2)
Free cash flow $m 101.3 142.1 139.3 154.8 269.8 All In Sustaining Costs
FINANCING CASHFLOW Duketon Northern A$/oz 785 827 909 914 914
Share issues/(buy-backs) $m 0.2 1.8 0.0 0.0 0.0 Duketon Southern A$/oz 1,017 932 952 942 886
Debt proceeds/(repayments) $m 0.0 0.0 0.0 0.0 0.0 Total A$/oz 945 901 940 935 892
Dividends $m (80.1) (80.7) (101.5) (121.8) (121.8)
Other $m (1.5) (1.6) 0.0 0.0 0.0
Financing cash flow $m (81.4) (80.4) (101.5) (121.8) (121.8) ASSUMPTIONS - Prices (nominal)
Change in cash $m 19.9 61.7 37.7 33.0 147.9 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e
Gold - Spot US$/oz 1,259 1,300 1,272 1,400 1,420
BALANCE SHEET Currency - AUD/USD US$/A$ 0.75 0.78 0.73 0.75 0.75
Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e
ASSETS
Cash & bullion $m 144.4 202.3 240.0 273.0 420.9 Valuation
Accounts receivable $m 6.8 6.0 6.8 7.7 7.8 Issued capital m
Inventory $m 74.8 89.4 89.4 89.4 89.4 Shares on issue 507.7
Property, plant & equipment $m 182.4 195.3 176.5 187.7 114.6 Options 2.5
Exploration & evaluation $m 151.7 171.6 171.6 171.6 171.6 Total diluted shares on issue 510.3
Mine properties & development $m 123.2 153.7 177.0 216.4 216.4 DCF sum-of-parts valuation
Other $m 2.5 4.3 4.3 4.3 4.3 A$m $/sh A$m $/sh A$m $/sh
Total assets $m 685.9 822.5 865.5 950.0 1,025.1 Moolart Well 371 0.73 384 0.75 360 0.70
LIABILITIES Garden Well 855 1.68 901 1.77 888 1.74
Accounts payable $m 43.7 48.6 23.1 32.6 32.8 Rosemont 493 0.97 522 1.02 522 1.02
Borrowings $m 2.3 0.8 0.8 0.8 0.8 Erlistoun/Baneygo 121 0.24 123 0.24 126 0.25
Dividends payable $m - - - McPhillamys 205 0.40 205 0.40 205 0.40
Other $m 101.4 136.2 136.2 136.2 136.2 Exploration 210 0.41 210 0.41 210 0.41
Total liabilities $m 147.5 185.7 160.2 169.7 169.9 Corporate (21) (0.04) (17) (0.03) (11) (0.02)
SHAREHOLDER'S EQUITY Total enterprise value 2,233 4.38 2,328 4.56 2,299 4.51
Share capital $m 431.5 433.2 433.2 433.2 433.2 Net cash + bullion / (debt) 273 0.54 421 0.82 186 0.36
Reserves $m 26.9 30.0 30.0 30.0 30.0 Equity Value 2,506 4.91 2,749 5.39 2,485 4.87
Retained earnings $m 80.0 173.6 242.1 317.1 392.0
Total equity $m 538.4 636.8 705.3 780.4 855.2
Weighted average shares m 500.8 507.7 507.7 507.7 507.7
2019e 2020e 2021e
Page 23
Resources 20 June 2019
Pantoro Limited (PNR) as at 20 June 2019
Recommendation Buy
Price $0.165
Target (12 months) $0.35
Table 5 - Financial summary
SOURCE: BELL POTTER SECURITIES ESTIMATES
PROFIT AND LOSS FINANCIAL RATIOS
Year ending June Unit 2017a 2018a 2019e 2020e 2021e Year ending June Unit 2017a 2018a 2019e 2020e 2021e
Revenue $m 63.9 87.2 87.0 157.2 162.8 VALUATION
Expense $m (41.4) (53.3) (56.3) (65.3) (65.4) NPAT $m (15.7) 13.8 11.5 54.0 54.2
EBITDA $m 22.6 33.9 30.7 91.9 97.4 Reported EPS c/sh (2.2) 1.8 1.2 4.6 4.6
Depreciation $m (17.0) (19.4) (19.2) (21.8) (22.8) Adjusted EPS c/sh 0.8 1.9 1.2 4.6 4.6
EBIT $m 5.6 14.5 11.5 70.1 74.6 EPS growth % nm nm -33% 292% 0%
Net interest expense $m - 0.1 - 1.6 2.8 PER x nm 9.4x 14.1x 3.6x 3.6x
Unrealised gains (Impairments) $m (21.3) (1.0) - - - DPS c/sh - - - - -
Other $m (0.0) (0.0) - - - Franking % 0% 0% 0% 0% 0%
PBT $m (15.7) 13.6 11.5 71.7 77.4 Yield % 0% 0% 0% 0% 0%
Tax expense $m - (0.2) - 17.7 23.2 FCF/share c/sh (0.3) 0.1 (0.1) 4.1 2.8
NPAT (reported) $m (15.7) 13.8 11.5 54.0 54.2 P/FCFPS x -50.1x 111.7x -148.0x 4.1x 5.9x
NPAT (underlying) $m 5.5 14.7 11.5 54.0 54.2 EV/EBITDA x 6.2x 4.1x 4.6x 1.5x 1.4x
EBITDA margin % 35% 39% 35% 58% 60%
CASH FLOW EBIT margin % 9% 17% 13% 45% 46%
Year ending June Unit 2017a 2018a 2019e 2020e 2021e Return on assets % -36% 24% 12% 32% 23%
OPERATING CASHFLOW Return on equity % -62% 37% 14% 38% 28%
Receipts $m 59.4 79.8 86.5 151.1 162.5 LIQUIDITY & LEVERAGE
Payments $m (39.9) (48.2) (55.8) (63.0) (65.4) Net debt (cash) $m - - (65) (113) (145)
Tax $m - - - - (17.7) ND / E % 0% 0% -56% -67% -65%
Net interest $m 0.0 0.0 - 1.6 2.8 ND / (ND + E) % 0% 0% -129% -201% -187%
Other $m 0.0 0.0 3.3 - - EBITDA / Interest x nm -473.0x nm -56.2x -34.4x
Operating cash flow $m 19.5 31.6 34.0 89.7 82.2INVESTING CASHFLOW ORE RESERVE AND MINERAL RESOURCE
Property, plant and equipment $m (2.5) (10.5) (13.6) (12.2) (11.3) Nicolsons Gold Mine Mt g/t Au (koz)
Mine development $m (18.0) (16.0) (7.3) (8.2) (7.5) Mineral Resources
Exploration & evaluation $m (1.4) (4.3) (4.2) (6.4) (4.8) Measured 0.303 11.9 116.0Other $m (0.0) 0.4 (10.0) (15.0) (26.0) Indicated 0.882 7.1 202.0Investing cash flow $m (21.9) (30.5) (35.1) (41.8) (49.6) Inferred 0.287 8.1 75.0Free Cash Flow $m (2.4) 1.2 (1.1) 47.9 32.6 Total 1.472 8.3 394.0
Ore ReserveFINANCING CASHFLOW Proven 0.310 9.2 92.0Share issues/(buy-backs) $m 4.0 1.6 58.0 - - Probable 0.654 6.0 126.0
Debt proceeds $m 3.2 - - - - Total 0.964 7.1 219.0
Debt repayments $m - (0.6) - - - Central Norseman Gold Project (CNGP) Mt g/t Au (koz)
Dividends $m - - - - - Mineral Resources
Other $m - - (3.3) - - Measured 4.600 1.6 240.0Financing cash flow $m 7.2 0.9 54.8 - - Indicated 12.710 3.7 1,510.0Change in cash $m 4.8 2.1 53.7 47.9 32.6 Inferred 18.210 4.2 2,480.0
Total 35.510 3.9 4,410.0
BALANCE SHEET
Year ending June Unit 2017a 2018a 2019e 2020e 2021e ASSUMPTIONS - Prices
ASSETS Year ending June (avg) Unit 2017a 2018a 2019e 2020e 2021e
Cash & short term investments $m 9.7 11.8 65.4 113.3 145.9
Accounts receivable $m 1.2 1.2 1.7 7.9 8.1 Gold US$/oz $1,259 $1,300 $1,274 $1,400 $1,420
Property, plant & equipment $m 10.0 17.2 23.1 26.6 28.8 Silver US$/oz $18 $17 $15 $16 $17
Mine development expenditure $m 22.1 26.0 27.6 29.2 29.9 Gold A$/oz $1,669 $1,678 $1,769 $1,905 $1,893
Exploration & evaluation $m 2.3 2.2 0.5 0.4 (1.6) Silver A$/oz $24 $22 $21 $22 $22
Other $m 5.3 5.0 15.0 30.0 56.0 Currency
Total assets $m 50.5 63.3 133.4 207.3 267.1 AUD:USD A$/US$ 0.75 0.78 0.72 0.74 0.75
LIABILITIES
Accounts payable $m 11.2 13.5 14.1 16.3 16.3 ASSUMPTIONS - Production & costs
Income tax payable $m - - - 17.7 23.2 Year ending June Unit 2017a 2018a 2019e 2020e 2021e
Borrowings $m - 0.6 0.6 0.6 0.6 Gold production
Unearned income $m 7.4 - - - - Ore tonnes processed kt 167.2 230.9 211.0 240.0 250.0
Other $m 2.7 3.8 3.8 3.8 3.8 Head grade g/t Au 7.6 7.6 7.7 11.5 11.5
Total liabilities $m 21.3 17.9 18.5 38.5 44.0 Gold produced koz 39.1 52.2 48.8 82.5 86.0
SHAREHOLDER'S EQUITY Costs
Share capital $m 173.4 175.0 233.0 233.0 233.0 Cash costs / oz Au A$/oz $928 $911 $1,105 $746 $700
Reserves $m 6.3 7.1 7.1 7.1 7.1 All-in-Sustaining-Costs (AISC) A$/oz $1,145 $1,130 $1,317 $955 $918
Retained earnings $m (150.4) (136.7) (125.2) (71.2) (17.0)
Total equity $m 29.3 45.4 114.9 168.9 223.1 VALUATION
Weighted average shares m 731.1 782.6 982.7 1,175.9 1,175.9 Ordinary shares (m) 1,175.9
Options in the money (m) 2.0
CAPITAL STRUCTURE Diluted m 1,177.9
Shares on issue m 1,075.9 Sum-of-the-parts $m $/sh $m $/sh $m $/sh
Total shares on issue m 1,175.9 Project (unrisked NPV10) 195.2 0.17 211.7 0.18 186.7 0.16
Share price $/sh 0.165 Other exploration 190.0 0.16 190.0 0.16 190.0 0.16
Market capitalisation $m 194.0 Corporate overheads (63.0) (0.05) (58.9) (0.05) (49.3) (0.04)
Net cash $m 53.7 Subtotal 322.2 0.27 342.8 0.29 327.4 0.28
Enterprise value (undiluted) $m 140.3 Net cash (debt) 53.7 0.05 65.4 0.06 113.3 0.10
Options outstanding (m) m (wtd avg ex. price $0.19 per share) 16.2 Total (undiluted) 375.9 0.32 408.2 0.35 440.6 0.37
Options (in the money) m 2.0 Add options in the money (m) 2.0 2.0 2.0
Issued shares (diluted for options) m 1,177.9 Add cash - - - - - -
Market capitalisation (diluted) m 194.4 Total (diluted) 375.9 0.32 408.2 0.35 440.6 0.37
Net cash + options $m 53.7
Enterprise value (diluted) $m 140.7
MAJOR SHAREHOLDERS
Shareholder % m
Robmar Investments 16.5% 177.7
FY19 FY20 FY21
Page 24
Resources 20 June 2019
Dacian Gold Ltd (DCN) as at 20 June 2019
Recommendation Hold (Speculative)
Price $0.54
Valuation $0.55
Table 6 - Financial summary
SOURCE: BELL POTTER SECURITIES ESTIMATES
PROFIT AND LOSS FINANCIAL RATIOS
Year ending June Unit 2017a 2018a 2019e 2020e 2021e Year ending June Unit 2017a 2018a 2019e 2020e 2021e
Revenue $m 0.8 1.4 236.3 279.8 262.8 VALUATION
Expense $m (20.3) (33.5) (206.5) (188.6) (197.7) NPAT $m (19) (5) (30) 27 3
EBITDA $m (19.5) (32.1) 29.7 91.1 65.1 Reported EPS c/sh (12) (3) (22) 20 3
Depreciation $m (0.3) (0.5) (52.2) (59.1) (57.0) EPS growth % na na na na -87%
EBIT $m (19.8) (32.6) (22.5) 32.1 8.1 PER x -4.6x -20.6x -2.4x 2.7x 21.1x
Net interest expense $m (0.0) (0.3) (7.5) (5.5) (4.7) DPS c/sh - - - - -
PBT $m (19.8) (32.9) (29.9) 26.6 3.4 Franking % 0% 0% 0% 0% 0%
Tax expense $m 0.9 27.5 - - - Yield % 0% 0% 0% 0% 0%
NPAT $m (18.9) (5.4) (29.9) 26.6 3.4 FCF/share c/sh (0) (1) (0) 0 0
P/FCFPS x -1.8x -0.6x -12.2x 1.2x 1.5x
CASH FLOW EV/EBITDA x -9.1x -5.5x 5.9x 1.9x 2.7x
Year ending June Unit 2017a 2018a 2019e 2020e 2021e EBITDA margin % nm nm 13% 33% 25%
OPERATING CASHFLOW EBIT margin % nm nm nm 11% 3%
Receipts $m - - 227.0 277.3 262.6 Return on assets % -21% -2% -9% 9% 1%
Payments $m (4.7) (2.1) (212.7) (188.6) (192.3) Return on equity % -26% -4% -25% 23% 3%
Exploration payments $m (13.5) (17.2) (3.6) (3.6) (3.6) LIQUIDITY & LEVERAGE
Tax $m - - - - - Net debt (cash) $m (89) 103 109 47 (2)
Net interest $m 0.2 1.7 (6.2) (5.2) (3.5) ND / E % -66% 78% 106% 36% -2%
Other $m 1.5 (0.0) - - - ND / (ND + E) % -194% 44% 51% 27% -2%
Operating cash flow $m (16.6) (17.5) 4.5 79.9 63.2 EBITDA / Interest x - - -4.0x -16.7x -13.9x
INVESTING CASHFLOW
Capex $m (1.0) (0.2) (10.4) (17.4) (14.4) ORE RESERVE AND MINERAL RESOURCEExploration & evaluation $m - - - - - Mt Morgans (WA) Mt g/t Au koz AuOther $m (31.4) (160.0) - - - Total resource 54.7 2.0 3,520
Investing cash flow $m (32.5) (160.2) (10.4) (17.4) (14.4) Measured 7.7 1.8 453
FINANCING CASHFLOW Indicated 32.4 1.9 1,992
Share issues/(buy-backs) $m 132.1 1.5 - - - Inferred 14.6 2.3 1,075Debt proceeds/(repayments) $m - 150.0 (44.5) (17.9) (27.3) Total Reserve 26.7 1.6 1,389Dividends $m - - - - - Proven 6.8 1.3 284
Other $m (2.6) (1.0) - - - Probable 19.9 1.7 1,105
Financing cash flow $m 129.6 150.5 (44.5) (17.9) (27.3)Change in cash $m 80.5 (27.3) (50.4) 44.6 21.4
CONCEPTUAL PROJECT ASSUMPTIONS - MT MORGANSBALANCE SHEET Year ending June 30 FY17 FY18 FY19 FY20 FY21
Year ending June Unit 2017a 2018a 2019e 2020e 2021e Currency US$/A$ 0.75 0.78 0.72 0.74 0.75
ASSETS Gold price A$/oz $1,669 $1,677 $1,769 $1,905 $1,893
Cash & short term investments $m 90.2 62.9 12.4 57.0 78.5Accounts receivable $m 3.4 0.4 0.1 3.4 3.7 CAPEX - development A$m (88) (132) - - -
Property, plant & equipment $m 62.4 253.1 211.3 169.6 127.0 CAPEX - sustaining A$m - (12) (8) (15) (12)
Exploration & evaluation $m 4.2 4.2 4.2 4.2 4.2 Ore milled Mt - 0.60 2.50 2.51 2.50
Other $m 0.3 44.5 52.9 51.8 50.6 Head grade g/t Au - 1.9 1.9 2.1 2.1
Total assets $m 160.4 365.1 280.9 286.0 264.0 Recovery % - 91% 92% 92% 92%
LIABILITIES Production koz - 34.2 140.5 159.0 153.5
Accounts payable $m 16.7 51.3 41.5 37.9 39.7 AISC A$/oz - 1,584 1,524 1,278 1,364
Borrowings $m 1.5 166.1 121.6 103.8 76.5
Other $m 7.8 14.8 14.8 14.8 14.8 VALUATION
Total liabilities $m 26.1 232.2 177.9 156.5 131.0 Ordinary shares (m) 226.4
SHAREHOLDER'S EQUITY Options in the money (m) 2.0
Share capital $m 191.8 195.2 195.2 195.2 195.2 Diluted m 228.4
Reserves $m 3.0 3.5 3.5 3.5 3.5
Retained earnings $m (60.4) (65.8) (95.8) (69.2) (65.7) $m $/sh
Total equity $m 134.3 132.9 102.9 129.5 133.0 Project (unrisked NPV10) 187 0.82
Weighted average shares m 158.3 205.0 133.3 133.3 133.3 Project (risk discount 0%, NPV10) 187 0.82
Other exploration 12 0.05
CAPITAL STRUCTURE Corporate overheads (20) (0.09)
Subtotal 178 0.78
Shares on issue m 225.7 Cash & options (53) (0.23)
Performance shares / other m 0.7 Total (diluted) 126 0.55
Total shares on issue m 226.4 Cash from equity raise - -
Share price $/sh 0.54 Total (diluted post equity raise) 126 0.55
Market capitalisation $m 123.2
Net cash $m -53.3
Enterprise value (undiluted) $m 176.5
Options outstanding (m) m (wtd avg ex. price $1.10 per share) 5.3
Options (in the money) m 2.0
Issued shares (diluted for options) m 228.4
Market capitalisation (diluted) m 124.3
Net cash + options $m -52.5
Enterprise value (diluted) $m 176.8
MAJOR SHAREHOLDERS
% m
Colonial First State 6.2% 13.9
Directors and Management 5.8% 13.0
1832 Asset Management 4.8% 10.9
Brian Rodan 2.8% 6.2
Page 25
Resources 20 June 2019
Millennium Minerals Ltd as at 20 June 2019
Recommendation Buy
Price $0.057
Target (12 months) $0.12
Table 7 - Financial summary
SOURCE: BELL POTTER SECURITIES ESTIMATES
PROFIT AND LOSS FINANCIAL RATIOS
Year ending December Unit 2017a 2018a 2019e 2020e 2021e Year ending December Unit 2017a 2018a 2019e 2020e 2021e
Revenue $m 115.6 127.2 156.9 204.2 217.4 VALUATION
Expense $m (93.5) (118.3) (124.7) (148.3) (154.3) NPAT $m (5.6) (9.4) (8.3) 14.8 24.9
EBITDA $m 22.1 8.8 32.2 56.0 63.1 Reported EPS c/sh (0.7) (1.2) (1.0) 1.7 2.8
Depreciation $m (25.3) (15.7) (38.1) (38.8) (38.7) Adjusted EPS c/sh (0.6) (1.0) (1.0) 1.6 2.7
EBIT $m (3.2) (6.9) (5.9) 17.2 24.5 EPS growth % -132% nm nm nm 68%
Net interest expense $m 0.3 (0.0) (2.4) (2.5) 0.4 PER x nm nm nm 3.4x 2.0x
Unrealised gains (Impairments) $m (1.1) (1.5) - - - DPS c/sh - - - - -
Other $m (1.6) (1.1) - - - Franking % 0% 0% 0% 0% 0%
PBT $m (5.6) (9.4) (8.3) 14.8 24.9 Yield % 0% 0% 0% 0% 0%
Tax expense $m - - - - - FCF/share c/sh (0.9) (2.1) (2.8) 2.8 3.7
NPAT (reported) $m (5.6) (9.4) (8.3) 14.8 24.9 P/FCFPS x -6.1x -2.7x -2.0x 2.0x 1.5x
NPAT (underlying) $m (4.5) (8.0) (8.3) 14.8 24.9 EV/EBITDA x 3.0x 7.6x 2.1x 1.2x 1.1x
EBITDA margin % 19% 7% 21% 27% 29%
CASH FLOW EBIT margin % nm nm nm 8% 11%
Year ending December Unit 2017a 2018a 2019e 2020e 2021e Return on assets % -5% -8% -6% 10% 16%
OPERATING CASHFLOW Return on equity % -8% -14% -12% 19% 25%
Receipts $m 116.0 127.2 152.3 201.9 216.8 LIQUIDITY & LEVERAGE
Payments $m (85.5) (105.6) (125.4) (142.4) (152.8) Net debt (cash) $m (18) (1) 9 (15) (48)
Tax $m - - - - - ND / E % -25% -1% 13% -18% -44%
Net interest $m 0.3 (0.0) (2.4) (2.5) 0.4 ND / (ND + E) % -34% -1% 12% -22% -78%
Other $m - - 0.9 - - EBITDA / Interest x nm 2940.3x 13.5x 22.5x nm
Operating cash flow $m 30.8 21.5 25.4 57.0 64.4INVESTING CASHFLOW ORE RESERVE AND MINERAL RESOURCEProperty, plant and equipment $m (2.1) (1.7) (28.2) (13.1) (10.4) Nullagine Gold Project Mt g/t Au (koz)Mine development $m (12.7) (11.1) (12.1) (10.7) (12.7) Mineral ResourcesExploration & evaluation $m (23.3) (25.6) (9.1) (8.4) (8.4) Measured 5.690 1.6 287.6Other $m (0.0) (0.1) - - - Indicated 9.190 1.5 461.6Investing cash flow $m (38.1) (38.4) (49.4) (32.2) (31.4) Inferred 7.970 1.6 410.0
Free Cash Flow $m (7.3) (16.8) (24.0) 24.8 33.0 Total 22.850 1.6 1,159.1Ore Reserve
FINANCING CASHFLOW Proven 1.580 1.5 74.2Share issues/(buy-backs) $m 0.1 0.1 15.0 - - Probable 5.550 1.7 301.2
Debt proceeds $m - 10.0 30.3 - - Total 7.130 1.6 375.3Debt repayments $m (0.1) (5.3) (5.0) (30.0) -Dividends $m - - - - - ASSUMPTIONS - PricesOther $m (0.0) (0.6) (0.9) - - Year ending December (avg) Unit 2017a 2018a 2019e 2020e 2021eFinancing cash flow $m 0.0 4.2 39.3 (30.0) -Change in cash $m (7.3) (12.6) 15.3 (5.2) 33.0 Gold US$/oz $1,260 $1,272 $1,361 $1,410 $1,435
Silver US$/oz $17.06 $15.73 $16.07 $16.59 $16.88
BALANCE SHEET Gold A$/oz $1,644 $1,702 $1,882 $1,893 $1,913
Year ending December Unit 2017a 2018a 2019e 2020e 2021e Silver A$/oz $22.26 $21.02 $22.22 $22.27 $22.51
ASSETS Gold hedging
Cash & short term investments $m 17.9 5.3 20.6 15.5 48.4 Quantity oz Au - - 34,250 8,650 -
Accounts receivable $m 3.1 3.2 7.8 10.2 10.9 Price A$/oz - - 1,755 $1,755 -
Property, plant & equipment $m 19.5 18.2 27.4 25.0 23.7 Currency
Mine development expenditure $m 18.5 36.4 38.9 38.0 37.2 AUD:USD A$/US$ 0.77 0.75 0.72 0.75 0.75
Exploration & evaluation $m 32.4 39.9 39.5 36.2 31.1
Other $m 18.3 19.0 19.0 19.0 19.0 ASSUMPTIONS - Production & costs
Total assets $m 109.7 122.1 153.3 144.0 170.3 Year ending December Unit 2017a 2018a 2019e 2020e 2021e
LIABILITIES Gold production
Accounts payable $m 19.6 31.9 31.2 37.1 38.6 Ore tonnes processed kt 1,916 1,893 2,031 2,065 2,060
Income tax payable $m - - - - - Head grade g/t Au 1.3 1.5 1.6 1.9 2.0
Borrowings $m - 4.7 30.0 - - Gold produced koz 72.8 79.9 84.3 108.5 113.6
Other $m 19.0 21.4 21.4 21.4 21.4 Costs
Total liabilities $m 38.6 58.0 82.6 58.5 60.0 Cash costs / oz Au A$/oz $1,196 $1,310 $1,280 $1,144 $1,140
SHAREHOLDER'S EQUITY All-in-Sustaining-Costs (AISC) A$/oz $1,372 $1,419 $1,487 $1,344 $1,300
Share capital $m 165.3 165.4 180.4 180.4 180.4
Reserves $m 6.3 8.6 8.6 8.6 8.6 VALUATION
Retained earnings $m (100.5) (109.9) (118.2) (103.5) (78.6) Ordinary shares (m) 891.2
Total equity $m 71.1 64.0 70.7 85.5 110.3 Options in the money (m) 22.4
Weighted average shares m 781.3 791.3 842.7 891.0 891.0 Total shares diluted (m) 913.6
CAPITAL STRUCTURE Sum-of-the-parts $m $/sh $m $/sh $m $/sh
Project (unrisked NPV10) 110.7 0.12 131.1 0.15 116.5 0.13
Shares on issue m 891.2 Other exploration 15.0 0.02 15.0 0.02 15.0 0.02
Total shares on issue m 891.2 Corporate overheads (30.3) (0.03) (25.7) (0.03) (21.7) (0.02)
Share price $/sh 0.057 Subtotal 95.4 0.11 120.3 0.14 109.7 0.12
Market capitalisation $m 50.8 Net cash (debt) (16.4) (0.02) (9.4) (0.01) 15.5 0.02
Net cash $m -16.4 Total (undiluted) 79.0 0.09 111.0 0.12 125.2 0.14
Enterprise value (undiluted) $m 67.2 Dilutive effect of options (0.00) (0.00) (0.00)
Options outstanding (m) m (wtd avg ex. price $7.73 per share) 95.8 Add cash from options - - - - - -
Options (in the money) m 22.4 Total (diluted) 79.0 0.09 111.0 0.12 125.2 0.14
Issued shares (diluted for options) m 913.6
Market capitalisation (diluted) $m 52.1
Net cash + options $m -16.4
Enterprise value (diluted) $m 68.5
MAJOR SHAREHOLDERS
Shareholder % m
IMC Group 47.4% 422.1
Now 2019e 2020e
Page 26
Resources 20 June 2019
Gold Road Resources Ltd as at 20 June 2019
Recommendation Hold (Speculative)
Price $0.965
Valuation $1.15
Table 8 - Financial summary
SOURCE: BELL POTTER SECURITIES ESTIMATES
PROFIT AND LOSS FINANCIAL RATIOS
Y ear t o 3 0 Jun f o r F Y , 3 1 D ec f or C Y Unit 20171a 2018e 2019e 2020e 2021e Y ear t o 3 0 Jun f o r FY , 3 1 D ec f o r C Y Unit 20171a 2018e 2019e 2020e 2021e
Revenue A$m 0.0 0.0 101.7 259.8 269.6 NPAT (adjusted) A$m (7.7) (24.4) 10.4 63.2 67.9
Expenses A$m (11.6) (34.3) (73.7) (141.6) (148.8) Adjusted EPS A¢/shr (0.9) (2.8) 1.2 7.2 7.7
EBITDA A$m (7.7) (36.4) 27.9 118.2 120.8 EPS grow th % na na na 509% 8%
Depreciation and amortisation A$m (0.3) (0.7) (12.2) (29.5) (30.3) PER x na na 81.7 13.4 12.5
EBIT A$m (8.0) (37.1) 15.7 88.7 90.6 DPS A¢/shr - - - 1.0 2.0
Net interest income (expense) A$m (3.0) 3.0 (0.9) (0.3) 4.5 Yield % - - - 1% 2%
PBT A$m (10.9) (34.1) 14.8 88.3 95.0 Franking % - - - 100% 100%
Tax (Expense) Benefit A$m (3.2) 9.7 (4.4) (25.2) (27.1) Free Cash Flow (FCF) A$m (51.8) (199.6) (21.0) 100.9 93.6
NPAT (reported) A$m (7.7) (24.4) 10.4 63.2 67.9 FCF / share A¢/shr na na na 11.5 10.7
Adjustments (after-tax) A$m 0.0 0.0 0.0 0.0 0.0 Price / FCF x na na na 8.4 9.0
NPAT (adjusted) A$m (7.7) (24.4) 10.4 63.2 67.9 FCF yield % na na na 12% 11%
No te 1. For 6 months transitional period EV / EBITDA x na na 30.6 7.2 na
PROFIT AND LOSS (INTERIM) EV / EBIT x na na 54.4 9.6 na
Half year ending Unit Jun-17a Dec-17a Jun-18a Dec-18a Jun-19e EBITDA margin % na na 27% 45% 45%
Revenue A$m 0.0 0.0 0.0 0.0 0.0 EBIT margin % na na 15% 34% 34%
Expenses A$m (7.5) (11.6) (5.0) (31.5) (11.8) Return on assets % na na 2% 11% 11%
EBITDA A$m (7.5) (1.3) (5.0) (31.5) (11.8) Return on equity % na na 3% 17% 16%
Depreciation and amortisation A$m (0.3) (0.3) (0.3) (0.4) (0.7) LIQUIDITY & LEVERAGE
EBIT A$m (7.8) (1.6) (5.3) (31.8) (12.5) Net Debt (Cash) A$m (237) 74 96 (5) (91)
Net interest income (expense) A$m 4.0 (3.0) 2.5 0.8 0.4 Net Debt / Equity % na 22% 27% na na
PBT A$m (3.8) (4.6) (3.0) (31.1) (12.1) Net Debt / (Net Debt + Equity) % na 18% 22% na na
Tax (Expense) Benefit A$m 1.1 (3.2) 0.7 9.0 0.0 Net Debt / Total Assets % na 15% 18% na na
NPAT (reported) A$m (2.7) (7.7) (2.3) (22.0) (12.1) Net Debt / EBITDA % na na 343% na na
Adjustments (after-tax) A$m 0.0 0.0 0.0 0.0 EBITDA / Interest x (3) na 30 380 na
NPAT (adjusted) A$m (2.7) (7.7) (2.3) (22.0) (12.1) No te 1. For 6 months transitional period
ASSUMPTIONS - Prices
CASH FLOW Y ear t o 3 0 Jun f o r FY , 3 1 D ec f o r C Y Unit 20171a 2018e 2019e 2020e LT real
Y ear t o 3 0 Jun f o r F Y , 3 1 D ec f or C Y Unit 20171a 2018e 2019e 2020e 2021e GOLD - Spot US$/oz 1,281 1,272 1,361 1,410 1,420
OPERATING CASH FLOW CURRENCY - USD / AUD US$/A$ 0.78 0.75 0.72 0.75 0.75
Receipts A$m 0.0 0.0 102.0 260.2 270.0
Payments A$m (4.0) (8.0) (56.4) (131.1) (138.0) ASSUMPTIONS - Production (Equity share)
Tax A$m (0.4) 0.0 0.0 0.0 (14.9) Y ear t o 3 0 Jun f o r FY , 3 1 D ec f o r C Y Unit 20171a 2018e 2019e 2020e 2021e
Net interest A$m 3.4 4.7 (4.3) (0.3) 4.5 Gold production koz 57.5 138 141
Other A$m 0.2 0.2 0.0 0.0 0.0 All in sustaining cost A$/oz 1,190 1,085 1,111
Operating cash flow A$m (0.8) (3.1) 41.3 128.7 121.5 No te 1. For 6 months transitional period
INVESTING CASH FLOW RESOURCE BASE - Equity Share
Cap Ex and exploration A$m (51.0) (196.5) (62.3) (27.8) (27.9) Deposit Unit Measured Indicated Inferred Total g/t Au
Other A$m (0.6) 0.1 0.0 0.0 0.0 Gruyere koz 308 1,856 728 2,892 1.29
Investing cash flow A$m 86.0 (190.2) (66.0) (29.8) (29.0) Golden Highw ay/YAM14 koz 9 270 84 363 1.45
FINANCING CASH FLOW Central Bore koz 50 50 13.05
Net equity proceeds A$m 0.3 0.0 0.0 0.0 0.0 Total koz 317 2,125 863 3,306 1.32
Debt proceeds A$m 0.0 3.0 40.0 0.0 0.0
Debt repayments A$m 0.0 0.0 0.0 (25.0) (18.0) CAPITAL STRUCTURE
Dividends A$m 0.0 0.0 0.0 0.0 (8.8) Issued Securities Unit
Other A$m 0.0 (2.6) 0.0 0.0 0.0 Ordinary shares m 878.0
Financing cash flow A$m 0.3 0.4 40.0 (25.0) (26.8) Performance rights (various expiries and conditions) m 7.5
Change in cash A$m 85.5 (192.8) 15.3 73.9 65.8 Total Securities m 885.5
No te 1. For 6 months transitional period
Balance Sheet ($M) Substantial and Directors/Management Shareholdings
Y ear t o 3 0 Jun f o r F Y , 3 1 D ec f or C Y Unit 20171a 2018e 2019e 2020e 2021e M (%)
ASSETS Gold Fields Group 87.1 9.9% 17/05/17
Cash and short term investments A$m 236.8 44.0 59.2 133.2 198.9 BlackRock Group 82.0 9.3% 28/05/19
Accounts receivable A$m 19.2 13.4 13.9 14.8 16.3 Sun Valley Gold Master Fund 71.1 8.1% 27/03/19
Inventory A$m 0.1 1.2 5.7 6.3 6.8 Directors and management 5.4 0.6% various
Property, plant & equipment A$m 130.6 411.7 441.6 423.2 401.0
Exploration & development A$m 3.7 13.0 14.5 30.1 45.9 VALUATION
Other A$m 0.8 12.0 8.0 7.9 6.7 Now +12 months
Total assets A$m 391.2 495.3 542.9 615.4 675.6
LIABILITIES Exploration - Gruyere JV area 864 0.98 944 1.07 975 1.10
Accounts payable A$m 17.9 11.6 18.5 33.7 40.1 - North Yamarna area 68 0.08 68 0.08 68 0.08
Borrow ings A$m 0.0 117.6 155.0 128.0 108.0 - South Yamarna area 27 0.03 27 0.03 27 0.03
Other A$m 11.1 27.2 20.1 47.1 79.3 - Total 960 1.08 1,040 1.17 1,071 1.21
Total liabilities A$m 28.9 156.4 193.6 208.8 227.3 Corporate costs (37) (0.04) (37) (0.04) (33) (0.04)
SHAREHOLDERS EQUITY Net financials4 (8) (0.01) 16 0.02 115 0.13
Share capital A$m 203.9 203.9 203.9 203.9 203.9 Total 916 1.03 1,020 1.15 1,153 1.30
Reserves A$m 1.1 1.3 1.3 1.3 1.3
Retained earnings A$m 157.2 133.7 144.1 201.4 243.0 Notes: 2. May not add because of rounding and dilution effects;
Total equity A$m 362.3 339.0 349.3 406.6 448.2 3. Fully diluted basis using total of 885.5m securities (includes all performance rights); and
Weighted average shares m 875 877 878 878 878 4. Includes cash and equivalents but excludes gas pipeline and pow er station payables.
No te 1. For 6 months transitional period
+24 months
$ m 2 $ per share 2, 3 $ m 2 $ per share 2, 3
Date of change
$ m 2 $ per share 2, 3
Page 27
Resources 20 June 2019
Westgold Resources Ltd as at 20 June 2019
Recommendation Buy
Price $1.635
Target (12 months) $1.95
Table 9 - Financial summary
SOURCE: BELL POTTER SECURITIES ESTIMATES
PROFIT AND LOSS FINANCIAL RATIOS
Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e
Revenue $m 308 377 471 585 679 VALUATION
Operating expenses $m (227) (304) (395) (393) (441) Normalised NPAT $m 16 (1) (26) 60 89
EBITDA $m 81 72 76 192 238 Normalised EPS c/sh 5 (0) (7) 15 23
Depreciation and amortisation $m (57) (86) (109) (122) (131) EPS growth % na na na na 47%
EBIT $m 24 (13) (33) 70 107 PER x 40.3x na na 10.6x 7.2x
Net interest $m 0 (1) (2) (2) (1) DPS c/sh - - - - 2
PBT $m 25 (14) (36) 68 106 Franking % 0% 0% 0% 0% 0%
Tax (expense)/benefit $m (9) 13 9 (8) (17) Yield % 0.0% 0.0% 0.0% 0.0% 1.2%
Impairments/write-offs/other $m - - - - - FCF/share c/sh (20) (22) (18) 7 23
Reported NPAT $m 16 (1) (26) 60 89 FCF yield % -12% -14% -11% 4% 14%
Abnormal items $m - - - - - EV/EBITDA x 7.1x 8.2x 8.3x 3.2x 2.2x
Normalised NPAT $m 16 (1) (26) 60 89 PROFITABILITY RATIOS
EBITDA margin % 26% 19% 16% 33% 35%
PROFIT AND LOSS (INTERIM) EBIT margin % 8% -4% -7% 12% 16%
Half year ending Unit Jun-17a Dec-17a Jun-18a Dec-18a Jun-19e Return on assets % 3% 0% -4% 8% 11%
Revenue $m 109 219 152 233 229 Return on equity % 5% 0% -6% 13% 16%
Expense $m (88) (174) (130) (200) (184) LIQUIDITY & LEVERAGE
EBITDA $m 20 45 22 32 44 Net debt / (cash) $m (57) (43) (1) (28) (117)
Depreciation $m (14) (45) (41) (56) (54) ND / E % nc nc nc nc nc
EBIT $m 7 0 (18) (23) (10) ND / (ND + E) % nc nc nc nc nc
Net interest expense $m 1 (1) (0) (2) (1)
PBT $m 7 (1) (19) (25) (10) ASSUMPTIONS - Prices
Tax (expense)/benefit $m (4) (2) 15 7 2 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e LT real
Impairments/write-offs/other $m - - - - - Gold - Spot US$/oz 1,259 1,300 1,273 1,400 1,450
NPAT (reported) $m 3 (2) 0 (18) (8) - Hedging at year end (including pre-pay) koz 125 204 206 70 na
Abnormal items $m - - - - - - Average Price A$/oz 1,653 1,717 1,811 1,825 na
NPAT (adjusted) $m 3 (2) 0 (18) (8) - Average Realised Price A$/oz 1,522 1,661 1,570 1,822 1,933
CURRENCY
CASH FLOW USD/AUD US$/A$ 0.75 0.78 0.72 0.75 0.75
Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e
OPERATING CASHFLOW ASSUMPTIONS - Production (equity share)
Receipts $m 415 409 458 582 642 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e
Payments $m (340) (392) (431) (402) (449) Gold Division koz
Tax $m - (2) (0) - - Gold production - Meekatharra (MGO) koz 101 112 99 135 154
Net interest $m 0 (1) 3 (2) (1) - Cue (CGO) koz 9 69 102 118
Other $m 1 1 4 2 - - Fortnum (FGO) koz 2 42 60 70 71
Operating cash flow $m 76 15 33 180 191 - Higginsville (HGO) koz 85 56 31
INVESTING CASHFLOW - South Kalgoorlie (SKO) koz 79 34
Capex and exploration $m (135) (172) (154) (146) (99) - Total koz 267 253 260 307 343
Other $m (1) 75 50 (6) (3) All in sustaining costs - MGO A$/oz 1,290 1,503 1,387 1,180 1,213
Investing cash flow $m (136) (97) (103) (152) (102) - CGO A$/oz 1,623 1,455 1,345 1,252
FINANCING CASHFLOW - FGO A$/oz 60 1,392 1,235 1,086 1,183
Net equity proceeds $m (4) 70 22 - - - HGO A$/oz 1,244 1,581 1,653
Debt proceeds/(repayments) $m 35 (18) (11) - - - SKO A$/oz 1,244 1,237
Dividends $m - - - - - - Total A$/oz 1,252 1,470 1,402 1,213 1,220
Other $m 96 36 21 - -
Financing cash flow $m 127 88 32 - - SUBSTANTIAL & SIGNIFICANT SHAREHOLDERS
Change in cash $m 67 6 (37) 28 89 Shareholder M Shares Interest
Ruffer LLP 37.3 9.6%
BALANCE SHEET Golden Energy and Resources Limited 36.0 9.3%
Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e BlackRock Group 23.8 6.1%
ASSETS Paradice Investment Management Pty Ltd 23.0 5.9%
Cash & short term investments $m 67 73 36 64 153 Directors and management 32.2 8.3%
Accounts receivable $m 9 20 22 24 26 Totals 152.3 39.1%
Inventory $m 48 61 68 68 68
Mine development and PPE $m 229 357 369 378 366 VALUATION
Exploration & evaluation $m 163 147 159 169 178 Issued capital Unit
Other $m 3 9 9 9 9 Ordinary shares m 389.1
Total assets $m 518 667 663 711 800 Listed options m 61.8
LIABILITIES Unlisted employee options m 17.0
Accounts payable $m 73 85 70 75 76 Total Issued Securities m 467.9
Borrowings $m 10 31 35 35 35 Current + 12 months + 24 months
Other $m 134 146 154 138 137 Sum of parts valuation $m $/sh1 $m $/sh1 $m $/sh1
Total liabilities $m 218 261 260 248 248 Meekatharra Gold Operations 383 0.98 413 1.06 370 0.95
SHAREHOLDER'S EQUITY Cue Gold Operations 170 0.44 240 0.61 268 0.69
Share capital $m 174 277 299 299 299 Fortnum Gold Operations 95 0.24 68 0.17 66 0.17
Reserves $m 190 195 196 196 196 Other mineral,mining and investment interests 79 0.20 79 0.20 79 0.20
Retained earnings $m (65) (66) (92) (32) 57 Total Mineral Assets 727 1.86 800 2.05 784 2.00
Non-controlling interest $m - - - - - Corporate (40) (0.10) (36) (0.09) (32) (0.08)
Total equity $m 300 406 403 463 552 Enterprise value 687 1.76 764 1.95 751 1.92
Net cash / (debt)2 15 0.04 1 0.00 28 0.07
Weighted average shares m 305 368 389 389 389 Equity value 702 1.79 764 1.95 780 1.99
Notes. 1. Based on diluted capital of 391.1m; may not add due to rounding
2. Excludes cash from exercise of options where exercise is not dilutive at the above valuations
Page 28
Resources 20 June 2019
Recommendation structure
Buy: Expect >15% total return on a
12 month view. For stocks regarded
as ‘Speculative’ a return of >30% is
expected.
Hold: Expect total return between -5%
and 15% on a 12 month view
Sell: Expect <-5% total return on a
12 month view
Speculative Investments are either start-up
enterprises with nil or only prospective
operations or recently commenced
operations with only forecast cash flows, or
companies that have commenced
operations or have been in operation for
some time but have only forecast cash
flows and/or a stressed balance sheet.
Such investments may carry an
exceptionally high level of capital risk and
volatility of returns.
Research Team
Staff Member
TS Lim
Industrials
James Filius
Sam Haddad
Alex McLean
Chris Savage
Jonathan Snape
Damien Williamson
Healthcare/Biotech
John Hester
Tanushree Jain
Financials
TS Lim
Lafitani Sotiriou
Resources
Peter Arden
David Coates
Stuart Howe
Title/Sector
Head of Research
Industrials
Industrials
Industrials
Industrials
Industrials
Industrials
Healthcare
Healthcare/Biotech
Banks/Regionals
Diversified Financials/Fintech
Resources
Resources
Resources
Phone
612 8224 2810
613 9235 1612
612 8224 2819
613 8224 2886
612 8224 2835
613 9235 1601
613 9235 1958
612 8224 2871
612 8224 2849
612 8224 2810
613 9235 1668
613 9235 1833
612 8224 2887
613 9235 1856
@bellpotter.com.au
tslim
jfilius
shaddad
amclean
csavage
jsnape
dwilliamson
jhester
tnjain
tslim
lsotiriou
parden
dcoates
showe
Bell Potter Securities Limited ACN 25 006 390 7721 Level 29, 101 Collins Street Melbourne, Victoria, 3000 Telephone +61 3 9256 8700 www.bellpotter.com.au
Bell Potter Securities (HK) Limited Room 1701, 17/F Posperity Tower, 39 Queens Road Central, Hong Kong, 0000 Telephone +852 3750 8400
Bell Potter Securities (US) LLC Floor 39 444 Madison Avenue, New York NY 10022, U.S.A Telephone +1 917 819 1410
Bell Potter Securities (UK) Limited 16 Berkeley Street London, England W1J 8DZ, United Kingdom Telephone +44 7734 2929
The following may affect your legal rights. Important Disclaimer:
This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries. In Hong Kong, this research is being distributed by Bell Potter Securities (HK) Limited which is licensed and regulated by the Securities and Futures Commission, Hong Kong. In the United States, this research is issued and distributed by Bell Potter Securities (US) LLC which is a registered broker-dealer and member of FINRA. Any person receiving this report from Bell Potter Securities (US) LLC and wishing to transact in any security described herein should do so with Bell Potter Securities (US) LLC.
This is general investment advice only and does not constitute personal advice to any person. Because this document has been prepared without consideration of any specific client’s financial situation, particular needs and investment objectives (‘relevant personal circumstances’), a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the representative of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be made aware of your relevant personal circumstances and consulted before any investment decision is made on the basis of this document.
While this document is based on information from sources which are considered reliable, Bell Potter Securities Limited has not verified independently the information contained in the document and Bell Potter Securities Limited and its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility for updating any advice, views opinions, or recommendations contained in this document or for correcting any error or omission which may become apparent after the document has been issued.
Except insofar as liability under any statute cannot be excluded. Bell Potter Securities Limited and its directors, employees and consultants do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this document or any other person.
Research Policies: For Bell Potter’s Research Coverage Decision Making Process and Research Independence Policy, please refer to our company website:
https://www.bellpotter.com.au/topnavigation/private-clients/stockbroking/research
Disclosure of interest:
Bell Potter Securities Limited, its employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document (which its representatives may directly share) and may from time to time hold interests in the securities referred to in this document.
Disclosure: Bell Potter Securities acted as Lead Manager to Pantoro Limited’s (PNR) $15m equity raise of September 2018 and $43m equity raise of May 2019 and received fees for that service.
Disclosure: Bell Potter Securities acted as Lead Manager to Breaker Resources (BRB) $10.5m equity raise in October 2018 and $6.4m equity raise of May 2019 and received fees for that service.
Disclosure: Bell Potter Securities acted as Lead Manager to Millennium Minerals (MOY) $15m equity raise in February 2019 and received fees for that service.
Disclosure: Bell Potter Securities acted as Lead Manager to Xanadu Mines (XAM) $10m equity raise in June 2018 and received fees for that service.
ANALYST CERTIFICATION Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. The Analysts hold long positions in shares in EVN, NST, OGC, RRL, SBM, RSG, BSR, GOR, PNR WGX, S2R, and SLR.