Dacian Gold Limited
Strong Mill Reconciliation at 100.2% for Mt Morgans in September Quarter:Dacian Gold Limited (ASX: DCN) is involved in mineral exploration and development at its 100% owned Mt Morgans Gold Operation. Recently, the company published production results for September’19 quarter, where it highlighted that production for the period stood at 42,002 ounces, which was well in-line with the stated guidance for the first half of FY20 at 67,000-77,000 ounces. Company’s cash and gold-on-hand position at the end of September was reported at $53.9 Mn, up $8.3 Mn up from the previous quarter. The increase came after a scheduled $10.8 Mn debt repayment. The Company’s outstanding bank debt at the end of the period was reported at $94.7 Mn. The project-to-date mill reconciliation at 100.2%, confirms the strong reconciliation performance being seen at Mt Morgans.
In another update, the company announced a maiden mineral resource for its newly discovered Phoenix Ridge Deposit at its Mt Morgans Gold Operation, located near Laverton in Western Australia. The inferred Mineral Resource estimate for Phoenix Ridge came out to be more than the impressive grade of 8 g/t i.e. 481,000 tonnes at 8.1 g/t for 125,000 ounces.
Key Highlights of FY19 for the period ended June 30, 2019: Gold sales revenue for the period was reported at $132.6 Mn, which was generated from the sale of 75,000 ounces at an average gold price of $1,767.Total cost of goods sold inclusive of amortisation and depreciation was reported at $108.9 Mn. Cash held as on June 30, 2019 was reported at $35.5 Mn, and gold on hand recognised in inventory was reported at $10.1 Mn.
.png)
FY19 Key Financial Metrics (Source: Company Reports)
What to Expect:As per the release, given the impressive result for Phoenix Ridge, company expects that due to the proximity to the Mt Morgans treatment plant, there is an excellent potential to find additional high-grade mineralisation closer to the surface in areas that have not been drilled above the new resource. The Company is expected to commence infill-drilling as soon as possible with the aim of defining a new high-grade additional production source for Mt Morgans.
Stock Recommendation:DCN’s share generated a whopping three months return of 115.63%. Its ROE improved from -4% in FY18 to 1.9% in FY19. Its current ratio improved from 0.62x in FY18 to 0.74x in FY19. Its cash cycle for FY19 stood at negative 15.8 days, lower than the industry median of 46.2 days, which implies that the company is effectively managing its asset-liabilities. Moreover, its EV/Sales and EV/EBITDA multiples on NTM (Next Twelve Months) basis stood at 0.8x and 2.3x, lower than the industry median of 1.4x and 3.4x, respectively. Hence, considering the aforesaid facts and current trading levels, we recommend a “Buy” rating on the stock at the current market price of $1.495, up 8.333% on October 9, 2019 on account of decent production results along with strong cash and bullion position.
Ramelius Resources Limited
Greenfinch Clearing Permit Granted by DMIRS:Ramelius Resources Limited (ASX: RMS) is involved in the exploration, mine development, mine operations and the production and sale of gold. Recently, the company announced that the revised clearing permit application for the Greenfinch open pit project has been granted by the Department of Mines, Industry Regulation and Safety (DMIRS). The company is expected to work with DMIRS and related regulatory bodies to complete the outstanding conditions to enable the project to be brought into production, for which a revised mine schedule and life-of-mine plan will be produced once all conditions are satisfied.
In another update, the company notified the appointment of Dr Natalia Streltsova as an Independent Non-Executive Director of the Company, effective from October 1, 2019.
Key Highlights of FY19 for the period ended June 30, 2019: Revenue from ordinary activities for the period increased by 3.2% to $352.77 Mn.Earnings before Interest, Tax, Depreciation & Amortisation (EBITDA) for the period decreased by 11.7% to $112.21 Mn. Net profit after tax attributable to members decreased by 29.1% to $21.83 Mn. The Board of Directors paid a fully franked final dividend of 1 cent per ordinary share as on October 4, 2019. Net cash and bullion at the end of the period was reported at $106.8 Mn with no debt, as compared to cash and bullion worth $95.5 Mn in the previous year.
.png)
FY19 Key Financial Metrics (Source: Company Reports)
FY20 Guidance:As per the release, FY20 guidance for RMS has been estimated at 205–225,000koz at an All-In Sustainable costs (AISC) of $1,225–$1,325/oz.
Stock Recommendation:RMS’s share generated a decent YTD return of 163.27%. For the fifth consecutive year, the company posted a decent net profit after tax, demonstrating the operating and financial strength of the Company and its assets. Moreover, the company announced a fully franked dividend for the first time since 2010. Its EBITDA margin for FY19 stood at 32%, better than the industry median of 29.1%. Its current ratio for FY19 stood at 2.94x, better than the industry median of 1.75x, which implies that the company is in a better position to address its short-term obligations than its peer group. Hence, considering the aforesaid facts and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $1.385, up 7.364% on October 9, 2019 on account of grant of Greenfinch clearing permit.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.