gold flake

Auriant Mining

OMX: AUR

SEK532.7m market cap

SEK5.4 last close

Auriant Mining is a Swedish junior gold mining company focused on Russia. It has two producing mines (Tardan and Solcocon), one advanced exploration property (Kara-Beldyr) and one early stage exploration property (Uzhunzhul).

Investment summary

Auriant’s Q320 results were reported within the context of known production. While financial results were somewhat below our expectations (see Exhibit 1), the shortfall could be almost entirely attributed to the underperformance of Auriant’s peripheral Solcocon alluvial asset, where the operations of a third-party contractor were disrupted by the coronavirus. By contrast, operations at Auriant’s core Tardan asset were almost completely unaffected by COVID-19, with production within the expected range and costs below our expectations. We have reduced our EPS forecast for FY20 by 8.5% to reflect both Solcocon’s performance in Q3 and our expectations for Q4, and the decline in the gold price since 6 November. Nevertheless, three quarters into the year, Auriant achieving its full-year production guidance appears almost a foregone conclusion. In the meantime, its shares are trading on a current year P/E multiple of only 4.6x and at less than half our valuation of the company.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2018A 17.4 (1.7) (10.2) (10.8) N/A 14.6
2019A 29.8 7.2 (2.2) (1.2) N/A 6.8
2020E 53.9 30.3 16.5 14.0 4.5 1.7
2021E 55.3 30.4 16.7 10.9 5.8 3.2
Industry outlook

In the event that Auriant raises US$20m in equity (NB This is subject to the gold price and cash-flow and could be less) at SEK6.40/share, we estimate that it is capable of generating average cash flows of US$63.4m and EPS of 44.6c pa in the period FY25–33. Discounted at 10% pa, we value the resulting (maximum potential) stream of dividends to shareholders at US$1.76/share (cf US$0.83/share previously).

Last updated on 14/01/2021
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Share price graph
Balance sheet
Forecast net debt (US$m) 59.5
Forecast gearing ratio (%) 566
Price performance
%
1m
3m
12m
Actual (1.8) (3.9) 63.6
Relative* (6.7) (11.1) 41.4
52-week high/low SEK7.2/SEK3.0
*% relative to local index
Key management
Peter Daresbury Chairman
Danilo Lange CEO
Katerina Popova Head of PR&IR