4 Metal and Mining Stocks – PRU, DCN, PLS and STO

Perseus Mining Ltd

PRU Details
 
Commenced the commercial production at the Sissingué Gold Mine: Perseus Mining Ltd.’s (ASX: PRU) stock initially rose over 3% on April 03, 2018 before slipping by 3.23%, after the company commenced the commercial production at the Sissingué Gold Mine. The company had completed the ramp-up of operations at the Sissingué Gold Mine in Côte d’Ivoire ahead of schedule and had designated April 01, 2018 as the first day of commercial production. This is PRU’s key milestone as the company now has a second-high quality cash flow stream, which significantly reduces the reliance on the Edikan Mine in Ghana for cash generation. Moreover, PRU is on track to achieve the production guidance of 140-160,000 ounces and 250 – 285,000 ounces, for the first half of 2018 and FY18, respectively. Additionally, PRU is well positioned to achieve its target of producing more than 500,000 ounces of gold per year from its three West African operations, namely Edikan, Sissingué and Yaouré. For the six months ending 31 December 2017, Perseus reported a net loss after tax of $11.5 million or 1.18 cents per share considering foreign exchange loss and writing off capitalised exploration and development expenses. Earnings before interest, tax, depreciation and amortisation increased significantly from the comparative period to $34.8 million against 31 December 2016 loss of $15.7 million. Increased gold production and higher gold prices realised in the period led to an $32.9 million increase in revenue to $167.5 million compared to $134.6 million in the corresponding period in 2016. The group expects gold production for the 12 months to June 2018 to increase to 250-285,000 ounces, including production from Edikan and the second producing mine, the Sissingué Gold Mine in Cote d’Ivoire; and these are expected to deliver Group all-in site costs for the full financial year of US$950-1,100 per ounce. As a result, PRU stock has risen 24% in three months as on March 29, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $0.45
 

PRU Daily Chart (Source: Thomson Reuters)
 

Dacian Gold Ltd

DCN Details 
 
First gold poured at 100%?owned Mt Morgans Gold Project: Dacian Gold Ltd.’s (ASX: DCN) stock rose 5% on April 03, 2018 after the company’s first bar of gold was poured at its 100%?owned Mt Morgans Gold Project in WA on March 29, 2018. This is achieved at the back of the timely completion of the construction of new A$200m gold mine and efforts made on budget. DCN’s production ramp?up is underway and the company is targeting 180,000?210,000oz in FY2019. Further, the company expects 30,000?40,000oz of production for FY2018 (June quarter 2018). At the end of the March quarter 2018, the estimated overall liquidity available to DCN is approximately A$50 million, including A$40 million in cash and A$10 million available from its debt facility. Additionally, the Mineral Resource and Ore Reserve updates are in progress, including the maiden Ore Reserve for Cameron Well. As a result, DCN stock has risen 5% in three months with a six month rise of 47%, as on March 29, 2018; and we have a “Hold” recommendation on the stock at the current price of $3.09
 

DCN Daily Chart (Source: Thomson Reuters)
 

Pilbara Minerals Ltd

PLS Details
 
Completes the Equity Subscription Agreement with POSCO: Pilbara Minerals Ltd.’s (ASX: PLS) stock rose 1.82% on April 03, 2018 after the company completed the Equity Subscription Agreement with POSCO, and now POSCO is a 4.75% shareholder in the company. PLS has received funds of aggregate A$79.6M from POSCO. This is a part of establishing a long-term strategic offtake and joint venture relationship between the companies. PLS had secured the first-mover position in the fast-growing South Korean lithium raw materials market due to the agreement with POSCO. The funds received will be used for the planned A$207M expansion of Stage 2 of the Pilgangoora Project to 5Mtpa. Moreover, the company continues the Feasibility studies for the Pilgangoora Stage 2 expansion and a resource upgrade is expected in the coming weeks. Overall, the mine development and processing facilities for Stage 1 of the Pilgangoora Project are on track for first concentrate in June 2018. Meanwhile, PLS stock has fallen 26.01% in three months as on March 29, 2018 owing to the sector driven headwinds. However, based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $0.84
 

PLS Daily Chart (Source: Thomson Reuters)
 

Santos Ltd

STO Details
 
Takeover offer from Harbour Energy: Santos Ltd.’s (ASX: STO) stock surged 16.2% on April 03, 2018 after the company received a 100% takeover offer from Harbour Energy. The indicative offer price of US$4.98 per share, or A$6.501 per share is a 28% premium to the last closing price of STO of A$5.07 per share on March 29, 2018. Further, this is an additional value over and above the indicative offer price of up to A$0.16 per share for those shareholders who are able to realise the full value of STO’s franking credits. However, there is no certainty that the Harbour Proposal will result in an offer for STO that is capable of being considered by shareholders. Moreover, the takeover offer from Harbour is subject to a number of conditions, including regulatory approvals, completion of confirmatory due diligence, etc. On the other hand, Santos, having a 13.5% interest in PNG LNG, was advised by the PNG LNG operator that following the earthquakes in the Southern Highlands and Hela Provinces during the week of 26 February 2018, preliminary assessments of damage to PNG LNG facilities indicated about eight weeks of time required to complete repairs and restore production. The group expects 2018 to be an exciting year as the group is at an inflection point, poised to start to move on growth. STO will increase capital investment across core Australian assets and increase exploration and appraisal activities in Queensland and the Cooper Basin as well as drill more production wells. The group has indicated to start Front End Engineering and Design on the Barossa offshore gas project which is the lead candidate for backfilling the Darwin LNG Project. New Energy Solutions business is also expected to help develop integrated gas, solar and energy storage projects. Meanwhile, STO stock has risen 2.01% in one month as on March 29, 2018; and the group aims to hold its annual general meeting on May 03, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $5.89
 

STO Daily Chart (Source: Thomson Reuters)

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