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).
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.
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).