Aurelia Metals Limited

Hera Mine Drilling Update: Aurelia Metals Limited (ASX: AMI) is engaged in the exploration and mineral development of gold, lead, zinc, silver and copper.The company, in the month of February 2019, provided a North Pod Drilling update related to the progress of exploration and resource infill drilling at Hera Mine.

The final assay results for a further 34 drill holes, in addition to the 12 holes, has been received by AMI. Two drill holes – HRUD642 and HRUD651 supported the strong high grade.


Intercepts for multiple new high-grade base metal, silver and gold (Source: Company Reports)

Financial Performance in 1H FY 2019: AMI recorded excellent results largely on the back of contribution from Peak Mines which was acquired in April 2018.The revenues for the same period recorded a growth of 140% to $165.463 million. PBT stood at $43.455 million also witnessed the alike momentum with growth at 137%.

Gold forward losses of $6.2 million due to higher gold prices was recorded in pre-tax profit. Net profit at $26.41 million against $18.33 million in 1H FY18 saw a pcp growth of 44%.


1H FY19 Financial Results Summary (Source: Company Reports)

The company’s balance sheet has been improving and there was building in cash. Debt on balance sheet stands zero for 1H FY19.The strong balance sheet with increased cash is expected to fund internal projects under consideration such as Peak Pb/Zn plant upgrade, Great Cobar exploration decline, Nymagee mine development and Hera Cu circuit modifications.

Performance of Hera and Peak Mine in 1H FY19: Total ore mining for Hera during the period came in at 254,915 tonnes with an average grade of 4.25g/t gold, 1.79% lead and 2.66% zinc. Reduction in underground mining at Hera is based on attaining enough levels of inventories. Hera produced 29,970 oz of gold at an AISC of $607/oz. Peak produced 41,363 oz at an ASIC of $857/oz.

Stock Recommendation: Looking at the valuation, the stock is trading at price to book value of 3.3x which is significantly higher than the industry median of 1.4x, showing overvalued at the current juncture. At CMP of $0.815, the stock is trading at P/E multiple of 5.590x with a market capitalization at $702.98 million. In the past 1 year, the stock witnessed a rise of 102.50% and is trading slightly towards the 52-week higher level of $0.990.

Considering the stretched valuations as compared to the industry and significant movement in the share price in last 1-year and trading at the higher level,we find the stock “Expensive” at the current market price of $0.815 per share (up 0.617% on 10 April 2019).
 

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