Resolute Mining Limited

RSG Details

Resolute Mining Limited (ASX: RSG) has received a notice from the Local Union Committee of the Union Nationale des Travailleurs du Mali Somisy-SA (the Union). The Union enforced a 120-hour strike order at the Syama Gold Mine in Mali commenced at midnight on Monday 31 July 2017. Daily operations at Syama currently involve approximately 1,800 personnel of which approximately 490 are members of the Union. However, the strike action will not affect surface or underground mining activity at Syama and will not have a material effect on gold production. Further, the company confirms the strike notice will have no impact on Resolute’s recently announced FY18 production guidance of 300,000 ounces at All-In Sustaining Costs of A$1,280/oz (US$960/oz. Capital expenditure for growth projects at Syama Underground and Ravenswood Expansion Project is estimated at A$162 million (US$122 million), while exploration budget is at A$38 million (US$29 million).


FY18 Production and Costs Guidance; (Source: Company reports)

For FY17, the company reported gold production of 329,834 ounces at an AISC of A$1,132 per ounce (US$853 per ounce) significantly better than original cost guidance of A$1,280 per ounce and revised guidance of A$1,150 per ounce. Average gold price received at A$1,717 per ounce from total gold sales of 317,242 ounces. Gold production for the June Quarter 2017 of 70,654 ounces achieved at an AISC of A$1,502 per ounce (US$1,127 per ounce). We give a “Speculative Buy” recommendation on the stock at the current market price of $1.07


RSG Daily chart; (Source: Thomson Reuters)

Newcrest Mining

NCM Details

Gold production in the June 2017 quarter declined by 7.8% lower than the prior quarter due to decrease in production from Cadia, following the seismic event on 14 April 2017, while production from Lihir increased significantly, achieving record quarterly gold production of 276koz due to a record mill throughput rate result of 14.5mtpa. Production at Telfer was also higher than the prior quarter following the rainfall events experienced in the March 2017 quarter. The Group AISC per ounce for the June quarter of $902 per ounce, after normalization for the Cadia seismic event, was 26.5% higher than the prior quarter. This was driven by higher AISC at Cadia, Gosowong and Bonikro, partially offset by lower AISC at Lihir and Telfer. Cadia’s AISC per ounce for the June quarter was 70.2% higher than the prior quarter principally due to the lower sales volume impacting the sustaining capital on a per ounce sold basis. Moreover, Cadia’s AISC for the June quarter has been reduced by $839 per ounce for the seismic event which reflects the earnings normalization (i.e. Adjusted Operating Costs) in line with World Gold Council guidelines. It is expected that Cadia’s September quarter AISC will also be normalized when reported to reflect the non-representative scale of operation and cost associated with the site recovering from the seismic event. We maintain an “Expensive” recommendation at the current market price of $20.45


NCM Daily chart; (Source: Thomson Reuters)

Northern Star Resources Ltd

NST Details

Northern Star Resources Ltd (ASX: NST) reported a record gold production of 154,116oz in the June Quarter and 514,735oz in FY17, at the top end of full-year guidance of 485,000-515,000oz. NST sold 147,728oz gold in the Quarter at an all-in sustaining cost (AISC) of A$938/oz and A$1,013/oz for FY17, at bottom end of guidance range of A$1,000-A$1,050/oz. Despite sale of Plutonic in October 2016, record production highlighting the strengths of Northern Star’s Tier-1 assets, and the company is on track to grow production materially, with FY18 guidance of 525,000-575,000oz at an AISC A$1,000-1,050/oz. Moreover, the company witnessed a record normalized free cash flow of A$108m in the June Quarter before investing A$47m in organic production growth. Further, cash and cash equivalents increased A$54m in the Quarter to A$447m even after paying A$18m in dividends. Northern Star will spend A$65m in FY18 on expansionary capital for next chapter of production growth and a further A$35m on exploration to continue growing Resources and Reserves.


Key Group Performance Figures (Quarterly) from Continuing Operations; (Source: Company reports)

NST stock rose over 19% in the seven months (as on August 01, 2017), and is trading at slightly elevated levels. We maintain an “Expensive” recommendation on the stock at the current price of $4.52


NST Daily chart; (Source: Thomson Reuters) 

Beadell Resources Ltd

BDR Details

Gold production for the June 2017 quarter totaled 23,703 ounces, a decrease of 4% over the June 2016quarter. Production for the first half of 2017 declined by 8% yoy at 52,261 ounces. However, it was estimated to be considerably higher in the second half of the year as grade increases at depth in the Tap AB pit complex. The Company reiterates its 2017 annual production guidance of 140,000 to 150,000 ounces. Gold production for the next 12 months to June 2018 is expected to exceed 170,000 ounces. On the other hand, cash costs for the June 2017 quarter stood at US$1,492 per ounce, while All-in Sustaining Costs (AISC) for the June 2017 quarter were US$1,558 per ounce. Gold sales for the June 2017 quarter totaled 24,217 ounces at an average cash price received of US$1,247 per ounce. Whilst June quarter costs were expected to be higher as the pre-strip of Monkey Hill is completed, AISC per ounce has been negatively impacted by continued mining fleet availability issues and resultant reductions in material movement.


Production Summary; (Source: Company reports)

The Company has implemented cost reduction measures with the mobilization of a prominent Brazilian mining contractor in early July to complement the existing contractor. Mining performance is expected to improve in the second half of 2017 with reductions in unit costs due to increased material movement. However, the strength of the Brazilian Real continues to negatively impact AISC. As grade increases with depth in the Tap AB complex, production is expected to be significantly higher in the next 12 months. Further, consistency in head grade and production should result following the plant upgrade scheduled for commissioning in mid-2018. We give a “Speculative Buy” on the stock at the current market price of $0.19


BDR Daily chart; (Source: Thomson Reuters)

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