Emerging into broad sunlit uplands

Auriant Mining 29 May 2020 Update
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Auriant Mining

Emerging into broad sunlit uplands

Q120 results

Metals & mining

29 May 2020

Price

SEK4.40

Market cap

SEK434m

RUB70.9975/US$; SEK9.6267/US$

Net debt (US$m) at end-March

73.5

Shares in issue (000s)

98,649

Free float

33%

Code

AUR

Primary exchange

Nasdaq First North Premier

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

15.8

17.3

93.8

Rel (local)

8.2

18.2

80.0

52-week high/low

SEK4.40

SEK2.27

Business description

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

Next events

Q120 results

29 May 2020

Q220 results

31 August 2020

Q320 results

30 November 2020

Q420 results

28 February 2021

Analyst

Charles Gibson

+44 (0)20 3077 5724

Auriant Mining is a research client of Edison Investment Research Limited

Auriant’s Q120 financial results were reported within the context of known production of 278kg via the company’s operational update on 15 April. However, the results are also significant in that they reflect the first full quarter of operations for the company’s new carbon-in-leach plant at Tardan. In this respect, five features are important: the plant operated at, near or above its targeted throughput rate of 50tph for the entire quarter; it exceeded its metallurgical recovery target rate of 90% by 1.7pp; cash costs of US$476/oz (sold) were 47.4% below those of Q119 and 24.4% below our (prior) forecast for FY20 (NB only 7.6% below our prior forecast once working capital changes are taken into account); all of the above was achieved in the depths of the Russian winter; and the effect of COVID-19 on operations, to date, has been minimal. As a result, we have upgraded our forecasts for Auriant for the full year and our valuation of the company.

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/18

17.4

(10.2)

(10.9)

0.0

N/A

N/A

12/19

29.8

(2.2)

(1.3)

0.0

N/A

N/A

12/20e

57.0

15.8

9.9

0.0

4.6

N/A

12/21e

43.0

13.1

5.8

0.0

7.9

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

FY20 guidance likely to prove conservative

Auriant’s official guidance for 2020 is for gold production of 900–940kg from 350–380kt of ore processed, implying a yield of 2.37–2.69g/t and a likely plant feed grade of 2.58–2.92g/t and compares with Auriant’s expectation that its mined grade will average 2.71g/t in FY20. This grade range forms the basis of our financial and operating forecasts for the rest of the year (see Exhibit 1). In the light of Q120 results, however, and with the worst of the weather now behind it, we expect plant throughput to remain towards the top end of its range, with the result that we are forecasting gold production for Tardan for the remainder of the year to be at or slightly above the top end of the company’s official guidance range, at 960kg.

Valuation: Up 15.3% to $0.83 (SEK7.99) per share

On the basis that management executes the Tardan CIL project and the Kara-Beldyr project according to the operational and financial parameters expected, we estimate that Auriant is capable of generating average cash flows of $49.4m, average earnings of $42.4m and average EPS of $0.230 in the nine-year period from FY25–33 (inclusive), thus allowing it to pay maximum potential dividends to shareholders of 25.9c per share in the period FY26–33 (inclusive). Discounted at our customary 10% discount rate, such a stream of dividends has a value of $0.83 per share (SEK7.99/share), rising to $1.46/share on the cusp of the company’s first meaningful dividend in FY26. However, if the gold price remains $1,705/oz indefinitely, our valuation of Auriant rises by 74.7%, from $0.83/share to $1.45/share, in which case an investment in Auriant shares at a price of SEK4.40 on 1 January 2020 would generate an internal rate of return (IRR) to investors of 28.5% in US dollar terms over the 16 years from 2020 to 2035 (inclusive).

Q120 results

Auriant’s Q120 financial results were reported within the context of known production of 278kg for the quarter (see Exhibit 1) and a largely known gold price. In this case, however, they are also significant as they reflect the first full quarter of operations for the company’s new carbon-in-leach plant, which was commissioned in November. In this respect, four factors are important:

The plant’s targeted throughput rate of 50tph. Had it run at this rate for the entire period, it would have processed 109.2kt of ore. In the event, it processed 100kt of ore (ie within 10% of maximum possible throughput), which is an excellent achievement in the first full quarter of operations, especially when maintenance is taken into account. In general, Auriant is budgeting a throughput rate of 80.0–82.5kt at the Tardan plant per quarter to produce an average 225kg gold per quarter.

In addition to the elevated throughput rate, the Tardan CIL plant also exceeded its metallurgical recovery target rate of 90% by 1.7pp.

Despite the elevated operating rates of the plant, cash costs of US$48.96/t processed were below our forecast of US$60.32/t. This, in turn, translated into cash costs of US$476/oz (sold), which were also below our prior forecast of US$630/oz for FY20.

Not only was this steady-state result achieved in the first full quarter of operations, but also in the depths of the Russian winter (historically the coldest month in Tyva is January, with temperatures as low as -22.5°C) and stands in sharp contrast to the marked seasonality that was a feature of Auriant’s former heap leach operation at Tardan.

Auriant’s financial results for the quarter were augmented by the fact that 39kg (1,247oz) of gold was sold in excess of production, which will have added approximately US$2.0m to revenues (at the average price of gold) during the period. Nevertheless, the financial effects of the evolution of the Tardan operation from a heap leach to a CIL one is clearly visible in Auriant’s Q120 results below/overleaf – in crude terms, output tripled and revenues quadrupled, while costs only doubled cf Q119. In addition to a summary of the results of operations in Q120, Exhibit 1 also presents its updated forecasts for the rest of FY20, by quarter, albeit with the caveat that the quarterly financial results of mining companies are prone to material volatility. As such, these forecasts should be seen as indicative, rather than prescriptive, especially with respect to individual quarters. Nevertheless, they also demonstrate the reconciliation between our forecasts for all three remaining quarters of the year and our updated full-year expectations.

Exhibit 1: Auriant results, Q119–Q420e, by quarter ($000s*)

Q119

Q219

Q319

Q419

FY19

Q120

***Change

(%)

Q220e

Q320e

Q420e

FY20e

FY20e

(previous)

Production

Tardan heap leach (kg)

86.2

141.1

202.3

95.4

525.0

0

-100.0

0

0

0

0

0

Tardan CIL (kg)

0.0

0.0

0.0

110.0

110.0

278

N/A

255

240

186

960

953

Tardan total (kg)

86.2

141.1

202.3

205.4

635.0

278

+222.5

255

240

186

960

953

Solcocon production (kg)

0.0

27.4

24.1

2.5

54.0

0

N/A

25

25

13

63

63

Gold price ($/oz)

1,312

1,308

1,474

**1,481

1,416

1,585

+20.8

1,704

1,705

1,705

1,668

1,572

Income statement

Revenue

4,142

6,638

10,007

8,975

29,762

16,154

290.0

15,351

14,546

10,905

56,957

51,332

Cost of sales

3,243

5,221

6,316

4,830

19,610

5,928

82.8

6,703

6,703

5,225

24,559

21,545

Gross profit

899

1,417

3,691

4,145

10,152

10,226

1,037.5

8,648

7,842

5,681

32,398

29,786

Depreciation

(1,233)

(984)

(1,142)

(1,652)

(5,011)

(1,647)

33.6

(1,702)

(1,757)

(1,812)

(6,918)

(3,879)

General & administration

(630)

(527)

(547)

(480)

(2,184)

(576)

-8.6

(668)

(668)

(668)

(2,580)

(3,000)

Other operating income

20

190

24

7

241

53

165.0

0

0

0

53

0

Other operating expenses

(61)

(45)

(140)

(755)

(1,001)

(182)

198.4

(116)

(116)

(116)

(530)

0

Impairments etc

N/A

0

EBIT

(1,005)

51

1,886

1,265

2,197

7,874

-883.5

6,162

5,301

3,085

22,423

22,907

Interest income

0

0

0

0

0

0

N/A

0

Interest expense

(1,004)

(1,120)

(1,066)

(1,200)

(4,390)

(1,584)

57.8

(1,677)

(1,677)

(1,677)

(6,614)

Net interest

(1,004)

(1,120)

(1,066)

(1,200)

(4,390)

(1,584)

57.8

(1,677)

(1,677)

(1,677)

(6,614)

(6,614)

Forex gain/(loss)

262

209

448

(240)

679

(147)

-156.1

(147)

Profit before tax

(1,747)

(860)

1,268

(175)

(1,514)

6,143

-451.6

4,486

3,625

1,408

15,662

16,293

Tax

(102)

(608)

(13)

445

(278)

248

-343.1

625

505

196

1,574

7,270

Marginal tax rate

5.8

70.7

(1.0)

(254.3)

18.4

4.0

-30.9

13.9

13.9

13.9

10.1

44.6

Profit after tax

(1,645)

(252)

1,281

(620)

(1,236)

5,895

-458.4

3,861

3,120

1,212

14,087

9,024

Average no. shares (000s)

98,649

98,649

98,649

98,649

98,649

98,649

0.0

98,649

184,525

184,525

141,587

149,849

Derivatives (000s)

560

0.000

0

0

0

345

-38.4

345

345

345

345

693

Fully diluted no. shares (000s)

99,209

98,649

98,649

98,649

98,649

98,994

-0.2

98,994

184,870

184,870

141,932

150,541

EPS ($/share)

(0.017)

(0.003)

0.013

(0.006)

(0.013)

0.060

-458.4

0.039

0.017

0.007

0.099

0.060

Diluted EPS ($/share)

(0.017)

(0.003)

0.013

(0.006)

(0.013)

0.060

-459.1

0.039

0.017

0.007

0.099

0.060

Source: Edison Investment Research, Auriant Mining. Note: *Unless otherwise indicated. **Estimate. ***Q120 vs Q119

Other notable features of the financial results for the quarter were the low general and administrative cost pro-rata to our full-year expectation and a low marginal tax rate, while the net interest charge was close to our (pro-rata) expectation for the full-year.

Compared with free cash flow derived from the income statement of US$7.5m (US$5,895k plus US$1,647k), actual cash flow from operations amounted to US$7.9m (ie there was a decline in working capital), of which cash consumed in investing activities was only US$1.3m (approximately flat cf US$1.2m in Q119). As a result, comparing the balance sheet of 31 March with that of 31 December, we calculate that net debt (including lease obligations) at Auriant declined by US$10.6m over the quarter, from US$84.1m to US$73.5m.

Guidance and assumptions

Auriant produced 115kg of gold in January – the equivalent of 1,380kg on an annualised basis. Since February, however, Auriant has been feeding blended high- and low-grade ore to the plant, as opposed to just high-grade ore only in January, to ensure a steady transition to year-round average grades. Even so, it produced 75kg (900kg annualised) in February and 88kg (1,056kg annualised) in March.

Auriant’s official guidance for Tardan for 2020 is for production of 900–940kg (average 225–235kg per quarter) gold from 350–380kt (average 87.5–95kt per quarter) of ore processed – implying a yield of 2.37–2.69g/t and a likely plant feed grade of 2.58–2.92g/t and compares with Auriant’s expectation that it’s mined grade will average 2.71g/t in FY20. This grade range forms the basis of our financial and operating forecasts for the remainder of the year (see Exhibit 1). In the light of Q120 results, however – and with the worst of the weather now behind it – we expect plant throughput to remain towards the top end of its range, albeit with a likely provisional break in processing in Q4 to allow for scheduled maintenance. As a result, we are forecasting gold production for Tardan for FY20 to be at the top of (or even slightly above) management’s guidance range, at 960kg.

Costs

As a result of test-work conducted during the ramp-up phase, Auriant has upgraded the leaching tanks at Tardan to improve ore oxidation to ensure stable processing results. In addition, in December 2019, the company agreed a new energy deal to increase the power allocation to the Tardan CIL plant by 25% from 2.0MW to 2.5MW using a newly built 35kV power line, which will allow it to minimise its use of diesel generators on site or, possibly, to cease their use entirely. Both will have a potentially beneficial effect on costs, as will the recent depreciation of the rouble, from RUB66.075/US$ at the time of our last note (see Auriant Mining, Tardan CIL at capacity, published on 4 March 2020) to RUB70.9975/US$ and the recent weakness in the oil price. For the moment however, we are maintaining our central unit working cost for Tardan for the rest of the year, of US$60.32/t (cf cash costs of US$48.96/t in Q120 – but US$59.28/t if changes in working capital are taken into account). For the full year, this will translate into a cash cost of production of US$673/oz, although we recognise this is inherently conservative and represents a potential upside risk to our financial forecasts in Exhibits 1 and 6.

Valuation up 15.3% to $0.83/share

In common with our standard practice, our valuation of Auriant has been performed via the discounting of maximum potential future dividends at a discount rate of 10%, assuming all excess cash generated is distributed to shareholders only after all debt has been repaid.

On the basis that management executes the Tardan CIL project and the Kara-Beldyr project according to the operational and financial parameters anticipated, we estimate that Auriant is capable of generating average cash flows of $49.4m (cf $49.2m previously), average earnings of $42.4m (cf $42.2m previously) and average EPS of 23.0c (cf 21.0c) in the nine-year period from FY25–33 (inclusive), thus allowing it to pay maximum potential dividends to shareholders of 25.9c per share (cf 23.0c) in the period FY26–33 (inclusive). Discounted at our customary 10% discount rate, such a stream of dividends has a value of $0.83 per share (cf $0.72/share previously), as shown in the exhibit below, rising to $1.46/share (cf $1.28/share previously) on the cusp of the company’s maiden dividend in FY26.

Exhibit 2: Auriant forecast EPS and maximum potential DPS, FY15–35e

Source: Edison Investment Research

Our ‘base case’ valuation of $0.83/share compares with one of $0.72 in March 2020 (see our note Tardan CIL at capacity). The main underlying factors occasioning the increase in value include a slightly higher gold price of US$1,705/oz (cf US$1,572/oz previously) for the remainder of FY20 and a higher share price (SEK4.40 cf SEK3.69), implying less future dilution associated with an assumed $40m equity raising in the near future (see ‘Sensitivities’ section). Note that our valuation specifically excludes any value attributable to Solcocon on account of the variable nature of alluvial mining operations. However, it is not impossible that activities at Solcocon could be reconfigured in the future to incorporate hard rock mining and processing via a carbon-in-pulp plant.

Sensitivities and risks

In qualitative terms, the principal risks to which Auriant is immediately exposed include geographical/sovereign (including regulatory risk), geological, metallurgical, engineering, funding, financing and management. In general terms, these may be summarised as execution risk, namely management’s ability to bring the Kara-Beldyr project in particular to account within its geographical jurisdiction at the required technical and economic parameters. Once in production, however, these risks will reduce and be partially replaced by others, such as commercial, commodity price, foreign exchange and global economic risks.

One specific risk – funding – bears further, immediate consideration from an empirical perspective. In this particular case, our valuation sensitivity to the price at which an assumed $40.0m equity funding is conducted is shown in the exhibit below:

Exhibit 3: Valuation sensitivity to equity funding price

Premium/(discount) to current share price (%)

-31.8

-20.5

-9.1

u/c

+2.3

+13.6

+25.0

Equity fundraising price (SEK)

3.00

3.50

4.00

4.40

4.50

5.00

5.50

Valuation ($/share)

0.68

0.74

0.79

0.83

0.84

0.88

0.91

Valuation (SEK/share)*

6.55

7.12

7.61

7.99

8.09

8.47

8.76

Change cf ‘base case’ (%)

-18.0

-10.9

-4.8

u/c

+1.3

+6.0

+9.6

Source: Edison Investment Research. Note: *Converted at the prevailing forex rate of SEK9.6267/US$.

Readers should note that (assuming conversion before FY26) the above table effectively also provides an analysis of Auriant being funded by way of a convertible bond (cf conventional equity) with a conversion price at one of those shown (typically at a premium to the existing share price cf conventional equity at a discount) and a coupon close to the company’s cost of debt. In the event of such a convertible remaining unconverted, however, and therefore behaving like conventional debt, our valuation of Auriant instead rises to $1.22/share (albeit with a correspondingly higher maximum debt level of $130.1m cf $79.7m in the ‘base case’ scenario, see the ‘Financials’ section).

Gold price

We set out our long-term gold price forecasts in Portents of economic weakness: Gold – doves in the ascendant, published on 14 August 2019 (ie before the COVID-19 crisis and before the Fed’s reaction in the form of a materially expanded asset base), and they are summarised in the table below.

Exhibit 4: Previously published Edison gold price forecasts*

Calendar year

CY20

CY21

CY22

CY23 & beyond

Real gold price forecast ($/oz)

1,572

1,395

1,387

1,350

Source: Edison Investment Research. Note: *See Portents of economic weakness: Gold – doves in the ascendant, published on 14 August 2019.

Trading close to $1,700/oz currently under the influence of both a re-expansion of the US total monetary base plus the perceived threat to the world economy from the coronavirus, the price of gold is self-evidently above our forecast real prices for all of the years from CY20 onwards. If the gold price were to remain at $1,705/oz for the life of its operations, our valuation of Auriant rises by 76.3%, from $0.83/share to $1.45/share, in which case an investment in Auriant shares at a price of SEK4.40 on 1 January 2020 would generate an IRR to investors of 28.5% in US dollar terms over the 16 years from 2020 to 2035 (inclusive), which is the life of operations.

Financials

At end-March 2020, Auriant had net debt of $72.7m on its balance sheet, excluding a ‘lease payable’ item of $0.8m. This compares with net debt on its balance sheet of $82.7m at end-December 2019 excluding a ‘lease payable’ item of $1.4m. Assuming the company raises an additional SEK385.1m ($40.0m) in cash via equity funding in the near future, we expect its net debt will evolve as follows until FY25, before being eliminated in FY26:

Exhibit 5: Auriant forecast net debt evolution, FY18–25e ($m)

End-year

FY18

FY19

FY20e

FY21e

FY22e

FY23e

FY24e

FY25e

Net debt (current estimates)

75.9

82.7

40.8

46.0

74.7

79.7

62.6

14.7

Source: Auriant Mining accounts, Edison Investment Research

Note that our estimate of Auriant’s maximum net debt requirement of $79.7m at end-FY23 equates to a leverage ratio (net debt/(net debt+equity)) of 64.3% (cf 70.8% previously).

COVID-19

Relative to the 550 employees that it had at 31 March 2020, Auriant has received results of COVID-19 tests from 271 employees (ie approximately half of the total) working at the Tardan mine, which were carried out as part of a government initiative to contain the spread of the new coronavirus in the region. Out of 271 employees tested, 26 have tested positive, although all are reported to be asymptomatic. In the meantime, Tardan has implemented quarantine measures in accordance with the instructions of the Russian authority Rospotrebnadzor responsible for the containment of COVID-19. A summary of the current situation at the mine is as follows:

The employees who have tested positive have been placed under observation in a separate quarantine facility at the Tardan mine.

The mine area has been closed so no one can enter or exit.

A temporary medical station has been set up with an infection specialist doctor from the local hospital, who has been assigned to the site to monitor the situation and provide any medical assistance that may be required.

Otherwise, the mine continues to operate as normal, with workers who have been placed in observation replaced by other employees. All personnel on site are subject to daily temperature checks and the mandatory use of personal protective equipment to minimise the risk of infection. Intensive disinfection measures have also been implemented. At present, the quarantine measures are reported to have had an insignificant effect on the mine’s operations. Further measures will depend on subsequent test results. In the meantime, however, management is confident that mining and gold production can continue at Tardan, although there may be temporary interruptions to some of the mine’s operations depending on the number of people who are infected and their positions at the mine. In accordance with Rospotrebnadzor’s instructions, the infected employees will be released from observation once two negative test results at least one day apart have been obtained.

Exhibit 6: Financial summary

US$'000s

2015

2016

2017

2018

2019

2020e

2021e

2022e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

33,429

43,380

33,532

17,373

29,762

56,957

42,989

42,367

Cost of Sales

(19,360)

(19,391)

(25,061)

(16,790)

(19,610)

(24,559)

(20,120)

(19,265)

Gross Profit

14,069

23,989

8,471

583

10,152

32,398

22,868

23,103

EBITDA

 

 

10,242

21,987

8,846

(1,714)

7,208

29,341

19,868

20,103

Operating Profit (before amort. and except.)

919

15,416

2,487

(6,373)

2,197

22,423

16,319

16,854

Intangible Amortisation

0

0

0

0

0

0

0

1

Exceptionals

(14,216)

0

(104)

0

0

0

0

0

Other

0

0

1,027

(1,763)

679

(147)

0

0

Operating Profit

(13,297)

15,416

3,410

(8,136)

2,876

22,276

16,319

16,855

Net Interest

(7,081)

(7,577)

(5,568)

(3,798)

(4,390)

(6,614)

(3,261)

(3,680)

Profit Before Tax (norm)

 

 

(6,162)

7,839

(3,081)

(10,171)

(2,193)

15,809

13,058

13,174

Profit Before Tax (FRS 3)

 

 

(20,378)

7,839

(2,158)

(11,934)

(1,514)

15,662

13,058

13,175

Tax

(1,116)

(1,355)

(28)

1,831

278

(1,574)

(2,425)

(2,741)

Profit After Tax (norm)

(7,278)

6,484

(2,082)

(10,103)

(1,236)

14,087

10,633

10,433

Profit After Tax (FRS 3)

(21,494)

6,484

(2,186)

(10,103)

(1,236)

14,087

10,633

10,434

Average Number of Shares Outstanding (m)

17.8

17.8

35.6

92.7

98.6

141.6

184.5

184.5

EPS - normalised (c)

 

 

(40.9)

36.4

(5.8)

(10.9)

(1.3)

9.9

5.8

5.7

EPS - normalised and fully diluted (c)

 

(35.8)

35.1

(5.7)

(10.8)

(1.2)

9.9

5.8

5.6

EPS - (IFRS) (c)

 

 

(120.7)

36.4

(6.1)

(10.9)

(1.3)

9.9

5.8

5.7

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

42.1

55.3

25.3

3.4

34.1

56.9

53.2

54.5

EBITDA Margin (%)

30.6

50.7

26.4

-9.9

24.2

51.5

46.2

47.4

Operating Margin (before GW and except.) (%)

2.7

35.5

7.4

-36.7

7.4

39.4

38.0

39.8

BALANCE SHEET

Fixed Assets

 

 

56,192

53,684

49,397

57,690

63,685

71,839

90,442

129,643

Intangible Assets

32,197

32,638

30,183

30,525

30,133

31,853

33,383

35,083

Tangible Assets

23,995

21,046

19,214

27,165

33,552

39,986

57,059

94,560

Investments

0

0

0

0

0

0

0

0

Current Assets

 

 

10,460

17,062

19,102

8,436

10,050

55,414

47,078

18,241

Stocks

4,833

7,883

7,425

3,753

5,057

9,493

7,165

7,061

Debtors

2,272

186

5,148

3,298

4,111

3,121

2,356

2,321

Cash

43

4,173

5,069

1,189

145

42,064

36,821

8,121

Other

3,312

4,820

1,460

196

737

737

737

737

Current Liabilities

 

 

(36,001)

(34,149)

(6,179)

(16,227)

(29,189)

(28,620)

(28,255)

(28,184)

Creditors

(5,901)

(3,537)

(2,005)

(1,828)

(6,147)

(5,578)

(5,213)

(5,142)

Short term borrowings

(30,100)

(30,612)

(4,174)

(14,399)

(23,042)

(23,042)

(23,042)

(23,042)

Long Term Liabilities

 

 

(70,307)

(66,995)

(82,054)

(73,053)

(68,864)

(68,864)

(68,864)

(68,864)

Long term borrowings

(61,366)

(58,117)

(71,098)

(62,671)

(59,781)

(59,781)

(59,781)

(59,781)

Other long term liabilities

(8,941)

(8,878)

(10,956)

(10,382)

(9,083)

(9,083)

(9,083)

(9,083)

Net Assets

 

 

(39,656)

(30,398)

(19,734)

(23,154)

(24,318)

29,769

40,402

50,835

CASH FLOW

Operating Cash Flow

 

 

6,347

19,359

9,752

3,992

9,185

25,807

23,019

25,641

Net Interest

(7,081)

(7,577)

(5,568)

(3,798)

(4,390)

(6,614)

(3,261)

(3,680)

Tax

(13)

(27)

(79)

(58)

0

(1,574)

(2,425)

(2,741)

Capex

(118)

(2,391)

(3,025)

(8,605)

(9,556)

(15,700)

(22,575)

(47,920)

Acquisitions/disposals

0

0

0

0

0

0

0

0

Financing

49

(10)

5,424

2,367

11

40,000

0

0

Dividends

0

0

0

0

0

0

0

0

Net Cash Flow

(816)

9,354

6,504

(6,102)

(4,750)

41,919

(5,242)

(28,700)

Opening net debt/(cash)

 

 

90,607

91,423

84,556

70,203

75,881

82,678

40,759

46,002

HP finance leases initiated

0

0

0

0

0

0

0

0

Other

0

(2,487)

7,849

424

(2,047)

0

0

(0)

Closing net debt/(cash)

 

 

91,423

84,556

70,203

75,881

82,678

40,759

46,002

74,702

Source: Company sources, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Auriant Mining and prepared and issued by Edison, in consideration of a fee payable by Auriant Mining. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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Frankfurt +49 (0)69 78 8076 960

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Auriant Mining and prepared and issued by Edison, in consideration of a fee payable by Auriant Mining. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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