Stocks’ Details

Dacian Gold Limited

Record Gold Recovery in March: Dacian Gold Limited (ASX: DCN) is engaged in mineral exploration and development at its 100% owned Mt Morgans Gold operation.

Highlights of March Quarter: During the quarter, the company produced 35,003 ounces of gold at an all-in-sustaining cost of $1,488/oz, within the guidance of $1,400 to $1,500/oz. Production during the quarter was lower than the forecasted production of 36,000 – 38,000 ounces due to the underperformance of a high grade stopping block at Beresford North.


Key Operating Statistics for March Quarter (Source: Company Reports)

Revision in June Production Guidance: Production guidance for the June quarter was revised to 36,000 – 38,000 oz at an AISC of A$1,500 – $1,600/oz. The previous production guidance was in the range of 50,000 to 55,000 oz at an AISC of A$1,050 – A$1,150/oz. The guidance was revised as a result of underground contractor performance issues which resulted in lower productivity.

FY2020 Guidance and Updated 8-year Life of Mine Plan: The company provided FY20 production guidance in the range of 150,000 – 170,000oz at an All-in-cost of A$1,400 - $1,500/oz. Consolidated All-in-Cost over FY2020 is expected to be between A$1,450 – A$1,550/oz.

Under the updated life of mine plan, the company aims to deliver average annual production of 170,000oz over the first 5 yearsat an All-in-cost of A$1,340 – A$1,440/oz. Total expected gold production over the 8-year plan (FY2020-FY2027) is 1.1 million ounces at an All-in-cost of A$1,280 – A$1,380/oz.

Stock Recommendation: The stock of the company generated returns of 1.94% over a period of 1 month and has a market capitalisation of ~$118.5 million. In the month of March, the company witnessed a significant turnaround in operational performance with numerous records set. Gold recovery during the month was reported at 97.1%. Considering the guidance provided for FY20 and the updated 8-year Life of Mine (LOM) plan, gold production in the coming years is expected to rise rapidly along with a decrease in all-in-cost. Based on the above factors and current trading level, we give a “Speculative Buy” rating on the stock at a current market price of $0.640, up 21.905% on 10 July 2019.
 

Evolution Mining Limited

Increased Investment on Exploration for FY20: Evolution Mining Limited (ASX: EVN) is engaged in mine development and operations. The company recently announced the preliminary June 2019 quarter and FY19 results.

Highlights of June Quarter: Gold production for June quarter was reported at 194,866 ounces as compared to 175,901 ounces in the previous quarter. All-in Sustaining Cost during the quarter stood at A$915/oz against A$925/oz in the previous quarter.Operating mine cash flow for the quarter stood at A$217.4 million as compared to A$168.3 million in March quarter.

Highlights of FY19: During the period, gold production totalled to 753,001 ounces, in line with the guidance of 720,000 – 770,000oz. AISC was also within the guidance range at A$924 per ounce.Operating mine cash flow for the year amounted to A$773.6 million.

FY20 Guidance: The company has provided FY20 gold production guidance of 725,000 – 775,000 ounces. AISC is expected to be between A$890 and A$940 per ounce. Exploration investment for the period is expected to be between A$80 to A$105 million.


FY20 Guidance (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 14.81% and 20.11% over a period of 1 month and 3 months, respectively. FY19 Performance was marked by production and AISC, in-line with the guidance provided. The company witnessed a Q-o-Q growth in production and cash flows along with a decrease in all-in sustaining cost. The exploration investment guidance provided for FY20 is substantially higher than FY19 guidance due to the success at Cowal. In 1HFY19, the company had an EBITDA margin of 45.6%, which is higher than the industry median of 34.6%. Considering the above factors, we give a “Hold” rating to the stock at a current market price of $4.320, down 2.262% on 10 July 2019.
 

Kirkland Lake Gold Limited

Period of Record Net Earnings: Kirkland Lake Gold Limited (ASX: KLA) is a gold mining, development and exploration company with a diversified portfolio of assets located in Canada and Australia. The company recently provided an update on the distribution of a dividend of USD 0.04 per security and it will be paid on 12 July 2019.

Key Highlights of Q1 2019: During the quarter, the company generated revenue amounting to $304.9 million, up 54% on the prior corresponding period. The company witnessed a 25% increase in cash of $83.9 million. Cash as at 31 March 2019 stood at $416.1 million. EBITDA for the period stood at $201.6 million, up 101% on pcp. Net earnings for the period were reported at $110.1 million, up 120% on pcp.


Financial Highlights (Source: Company Reports)

Outlook: Based on the strong results at Macassa and Fosterville mines in Q1 2019 and outlook for the remainder of the year, the company raised the lower end of consolidated production guidance from 920,000, and the new guidance is now in the range of 950,000 – 1,000,000 ounces. In addition, guidance for operating cash cost per ounce sold was also improved to be in the range of $285 - $305. The earlier guidance provided was in the range of $300 - $320.

Stock Recommendation: The stock of the company generated returns of 95.48% over a period of 1 year. The company reported robust performance in Q1CY19 and also issued a revised production and cost guidance owing to favourable results. The stock moved higher significantly in the 1Q19 numbers and in last 3-months, gained ~33% returns. Given the short-term higher returns in terms of share price and the decent annual guidance, we suggest investors to keep a close watch on the stock at the current market price of $60.020, down 0.957% on 10 July 2019, and wait for better entry levels.


Comparative Price Chart (Source: Thomson Reuters)       

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