Northern Star Resources Ltd

NST’s Resources and Reserves increased by 31% and 35%, respectively: Northern Star Resources Ltd (ASX: NST) has an engagement in the exploration, development, mining and processing of gold deposits and sale of refined gold derived from the Jundee, Kundana (100% owned and 51% owned operations), Kanowna Belle, Paulsens and South Kalgoorlie operations, and exploration in relation to gold deposits in Western Australia and in the Northern Territory.

The company recently published Kalgoorlie operations site tour presentation August 2019, where it highlighted that its FY2020 organic productionguidance has been estimated at 340,000 oz – 380,000 oz at All-In-Sustaining Cost (AISC) of A$1,260-A$1,370/oz. The five operating UG mines comprise Kanowna Belle, Millennium, HBJ, Raleigh (51% NST), and Rubicon-Hornet-Pegasus (RHP) (51% NST).In another update, NST highlighted that its resources increased by 31% or 4.9Moz, to 20.8Moz, along with the increase in the resource grade by 46% to 4.1gpt.Its reserves increased by 35% or 1.4Moz, to 5.4Moz, along with the increase in the reserve grade by 16% to 4.4gpt.

June ’19 Quarter Key Highlights:Group’s quarterly sales were reported at 232,042oz at AISC of A$1,238/oz, whereas its full-year sales were reported at 840,580oz at AISC of A$1,296/oz for FY2019.Pogogold sold in the quarter increased by 33% and costs decreased by 18%.Its free cash flow at the end of the period was reported at A$104 Mn.


June ’19 Quarter Operating Cash Flow Data (Source: Company Reports)

What To Expect:FY20 group guidance has been estimated at 800,000-900,000oz at A$1,200-A$1,300/oz, where Jundee is expected to produce 260,000-280,000oz at A$1,115-A$1,195/oz; Pogo is expected to produce 200,000-240,000oz at US$850-US$925/oz; and Kalgoorlie is expected to produce 340,000-380,000oz at A$1,260-A$1,370/oz.In addition to the production guidance, a further 60,000oz is forecasted to be stockpiled at Jundee stemming from Ramone open pit.


FY20 Production and Cost Guidance (Source: Company Reports)

Stock Recommendation:Its EBITDA margin for H1FY19 stands at 35.8%, better than the industry median of 34.6%. Its net margin is in line with the industry median of 13.0%. It is presently trading close to its 52 weeks high level of $14.055, and therefore, probability for correction increases. Hence, considering the aforesaid facts and current trading levels, we suggest investors to watch the stock at the current market price of $12.620 per share (up 1.774% on August 6, 2019).
 

Evolution Mining Limited

FY19 Gold Production Meets Stated Guidance:Evolution Mining Limited (ASX: EVN) has an engagement in the exploration, mine development, mine operations, and the sale of gold and gold/copper concentrate in Australia. The company recently published its June ’19 quarter report where it highlighted that its gold production in the period stood at 194,886 ounces at an All-in Sustaining Cost of A$915 per ounce.The Mine operating cash flow was reported at A$215.2 million, and the net mine cash flow was reported at A$152.2 million.

Its FY19 Gold production was reported at 753,001 ounces, which is in-between the stated guidance of 720,000 – 770,000oz.Its AISC for the full year was reported at A$924 per ounce, which is in-between the guidance of A$850 – A$900/oz.


EVN’s Production and Sales Summary (Source: Company Reports)

What to expect:Group’s FY20 gold production guidance has been estimated at 725,000 – 775,000 ounces with AISC in the range of A$890 – A$940 per ounce.



Stock Recommendation: Its EBITDA margin for H1FY19 stood at 45.6%, better than the industry median of 34.6%. Its current ratio for H1FY19 stood at 2.31x better than the industry median of 1.89x, which implies the company is in a better position to address its short-term obligations. The respectable liquidity levels might support the company in making deployments moving forward. Currently, the stock is trending towards its 52-week high price of $5.50 with PE multiple of 38.35x. Hence, considering the aforesaid facts and current trading level, we have a “Hold” recommendation on the stock at the current market price of $5.100 (down 2.857% on August 6, 2019).
 

Ramelius Resources Limited

RMS’ Share Surged Over 7% Post Binding Option Agreement with Rumble:Ramelius Resources Limited (ASX: RMS) has an engagement in the exploration, mine development, mine operations and the production and sale of gold. The company recently announced that Rumble Resources Ltd had signed a binding option agreement to acquire the High-Grade Western Queen Gold project. The Western Queen Gold Project happens to be a high-grade gold systemwith two mined open pit deposits with a combined historic production of 840,000t @ 7.8 g/t Au for 210,000oz.

This project provides an opportunity to explore for additional potential underground high-grade gold resources (Western Queen Central); and near-surface gold resources (Cranes Prospect). Under the agreement, Rumble will pay A$50,000 Cash for a 9-month option along with spending a minimum of A$200,000 on exploration expenditure within 9 months. At any time before the end of either option period, Rumble can pay A$1,000,000 in shares or cash (or any combination) at Rumble’s election to exercise the option to purchase the project 100%. Rumble has also granted Ramelius a last right of refusal to provide any gold processing and associated haulage services that relate to activities on the Western Queen Project.

June ’19 Quarter Key Highlights: Group’s gold production for the period stood at 47,342 ounces at an AISC of A$1,106/oz, where 30,670 ounces were produced at Mt Magnet (incl. Vivien) at an AISC of A$1,078/oz, and 16,672 ounces were produced at Edna May at an AISC of A$1,171/oz. The Cash & gold at the end of the period was reported at A$106.8 Mn after A$28.2 Mn capital expenditure in the Quarter.  


RMS’ Operational Key Metrics (Source: Company Reports)

What to Expect: FY20 production guidance has been estimated at 205-225,000oz at an AISC of A$1,225 – 1,325/oz, where 145,800 ounces has been estimated to be produced at Mt Magnet (incl. Vivien) at an AISC of A$1,100 – 1,200/oz, and 68,700 ounces has been estimated to be produced at Edna May (incl. Marda) at an AISC of A$1,475 – 1,575/oz. Group’s gold production for the September 2019 Quarter is expected to be between 43,000 – 48,000 ounces at an AISC of A$1,375 – 1,475/oz.

Stock Recommendation: Ramelius Resources Limited’ share generated excellent positive YTD return of 125.51%. Its current ratio for H1FY19 stood at 3.41x, better than the industry median of 1.89x, which implies the company is in a better position to address its short-term obligations. Its asset to equity ratio for H1FY19 stood at 1.53x, lower than the industry median of 1.66x. Currently, the company’s stock is priced close to its 52 weeks high level of $1.210 with PE multiple of 26.74x. Hence, considering the aforesaid facts and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $1.200 (up 7.623% on August 6, 2019).

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