Resolute Mining Limited (ASX: RSG)

Successfully completed investment in Loncor Resources - RSG is a well-known gold producer that focuses on a multi-pronged strategy as it continues to enhance its portfolio with acquisition of stakes in juniors like Orca Gold and Oklo Resources. Recently, Resolute Mining signed a strategic framework deal with Swedish equipment and tool manufacturer, Sandvik Mining for fully automating the company’s Syama gold mine in Mali. The Company has now completed the acquisition of a 27 per cent interest in Loncor Resources Inc (Loncor) (TSX:LN). After this, Resolute holds 51,000,000 common shares in Loncor which have been acquired via a CAD $2.6 million subscription for 26,000,000 shares in a placement of new Loncor shares and through a ‘share swap’ of CAD $2.5 million of Resolute shares for 25,000,000 existing Loncor shares.


Drilling Results from Tabakoroni Nord (Source: Company Reports)

Resolute has already established a strategic position in the north-eastern DRC with investments in Loncor and in Kilo Goldmines Limited (Kilo) (TSXV:KGL). Further, Loncor’s key DRC interests include the 100 per cent owned Makapela and Yindi prospects and a joint venture with Randgold Resources (DRC) Limited (Randgold), covering all of the exploration permit areas comprising Loncor's Ngayu project, other than certain parcels of land surrounding and including the Makapela and Yindi prospects. Resolute’s main focus is to participate in the development of a major new gold mining district consistent with Resolute’s Golden Pride legacy as a successful pioneer of the gold mining industry in East Africa. The shares of RSG have risen over 10.43 per cent in the last six months and are trading at a low P/E as compared to its peers. The stock slipped by 1.18 per cent as on 27 June 2018. We give a “Buy” recommendation at the current market price of $1.255 by looking at the future potential and it is expected that this collaboration with Loncor will deliver positive earnings to the Group.
 

Gold Road Resources Limited (ASX:GOR)

Focused on unlocking the potential of the Yamarna Belt- Gold Road’s mission is to create value for its shareholders, people and the community by discovering gold that can be mined profitably. The Group has planned about 165,000 metres drilling for 2018 at Yamarna and focuses on developing strategies to discover and develop world-class gold mines at Yamarna. Gold Road completed its annual exploration targets which formed the basis of the Company’s prioritised Greenfield exploration programme for 2018. The Group had primarily signed a sale agreement to acquire Sumitomo Metal Mining Oceania Pty Ltd.’s 50 per interest in the South Yamarna Project for $7 million. The Group recently entered into a $100 million of Revolving Corporate Facility, a $50 million of Working Capital Facility and a Gold Hedging Arrangement (Finance Facilities) with a financing syndicate comprising ING Bank Australia, National Australia Bank and Société Générale Hong Kong.


Budget of the Company’s Projects (Source: Company Reports)

At Gruyere Gold Project, it was observed that at the end of March 2018, 84 per cent of project engineering was complete, overall construction was 44 per cent complete and 17 per cent of EPC (process plant and associated infrastructure) construction was complete. In last one year, the stock price was moving upwards but started falling in last three months that is by 6.21 per cent. The stock fell by 1.98 per cent on 27 June 2018. We recommend to “Buy” the stock at the current market price of $0.74 as the Company has a dominant position on Yamarna and its exploration efforts are high while balance sheet position is decent to support construction.
 

OceanaGold Corporation (ASX:OGC)

Gold Production in line with expectations - OceanaGold Corporation is a mid-tier, high-margin, multinational gold producer with a decent organic growth pipeline. The Group managed to generate strong operating cashflow despite the modest working capital movements and it has no debt repayment until Q42018. The Net Margins increased significantly from 15 per cent in September 2017 to 36 per cent in December 2017. Initially, the Company was expecting that it will be producing 500,000 ounces and now it has revised the guidance to 540,000 ounces in FY2018. OGC commencedits expansion activities at Martha Project (a potential 10-year LOM extension). At Macraes, the mine life can be extended to 10 years and positive drill results at Golden Point are expected to increase the resource and will help to identify the areas of higher grade.


ROIC Trend (Source: Company Reports)

Moreover, during the March Quarter of 2018, the Company’s joint venture partner Mirasol Resources completed the first stage of drilling at the La Curva Project in Argentina and confirmed the presence of a large gold and silver system within the Castora Trend. It is expecting a strong cash flow yield in 2018 with a budgeted gearing ratio below 5 per cent at end of 2018. The stock price has been declining for one year and was down by 12.53 per cent but rose up by 13.15 per cent in last one month. It was worth noting that the Company repaid $84 million of debt and reduced the level to $167 million after paying the dividend of $12.3 million in FY17 and declared additional $6 million of dividend in Q1FY2018. The stock price moved up by 1 more per cent on 27 June 2018. We recommend to “Buy” the stock at the current market price of $3.74 as gold production so far has been generally in-line with the expectations, despite severe cold weather event that impacted the Haile operation early in the year.

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