gold water

Fifth successive quarter of success

Auriant Mining 11 June 2021 Update
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Auriant Mining

Fifth successive quarter of success

Q121 results analysis

Metals & mining

11 June 2021

Price

SEK4.70

Market cap

SEK464m

RUB73.1640/US$; SEK8.3314/US$

Net debt (US$m) at end-March 2021
(including lease liabilities)

66.1

Shares in issue (thousands)

98,768

Free float

25.89%

Code

AUR

Primary exchange

Nasdaq First North Premier

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.3)

5.9

4.3

Rel (local)

(6.9)

(2.6)

(26.4)

52-week high/low

SEK7.18

SEK4.25

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

Q221 results

30 August 2021

Q321 results

29 November 2021

Q421 results

28 February 2022

Q122 results

May 2022

Analyst

Charles Gibson

+44 (0)20 3077 5724

Auriant Mining is a research client of Edison Investment Research Limited

Auriant’s Q121 results were released within the context of known production and were very much in line with our prior expectations. They were also the fifth successive quarter in which the Tardan CIL plant has operated, to all intents and purposes, exactly to specification. Pre-tax profits for the quarter were within 3.5% of our prior expectation and, although the effective tax rate was higher (see Exhibit 2), the majority (76.7%) of this was in the form of non-cash, deferred taxes. In the wake of these results, we have increased our full-year earnings forecasts by 26.4% (largely reflecting a higher assumed gold price for the remainder of the year) and our EPS forecasts by 50.6% (on the basis that an assumed future equity raising occurs in early FY22 rather than mid-FY21 previously).

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/19

29.8

(2.2)

(1.3)

0.0

N/A

N/A

12/20

53.4

16.6

13.7

0.0

4.1

N/A

12/21e

52.7

15.8

13.4

0.0

4.2

N/A

12/22e

55.6

23.8

13.5

0.0

4.2

N/A

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

Underlying net debt reduction more than it appeared

Although net debt fell by only $1.5m during the quarter, to $64.2m (excluding lease liabilities), this measure of cash generation was artificially depressed by management’s new ‘as needed’ sales policy now that all of Auriant’s high-cost debt has been repaid. We estimate that net debt would have fallen by $3.3m ($13.1m on an annualised basis) if all the gold produced during the quarter had been sold and by $6.7m if all the gold held in inventory had also been sold.

Next steps

With the Tardan CIL plant now bedded down, management’s attention is turning to Kara-Beldyr, where it is fine tuning its budget for capex and preparing permitting documentation, and Solcocon, where drilling is exploring the potential to develop a gold processing plant to supersede current alluvial operations.

Valuation: US$1.72 (SEK14.33) per share

We have increased our forecasts for FY21 to reflect the recent strength in the gold price. On the basis that management executes the Kara-Beldyr project according to the operational and financial parameters expected and with production from FY25 (note: this is a risk already substantially mitigated by management’s success in developing the Tardan CIL project), we estimate that Auriant is capable of generating average annual cash flows of $63.5m, average earnings of $54.8m and average EPS of $0.409 from FY25–34, thus allowing it to pay (average) maximum potential dividends of 46.3c/share in FY26–34. Discounted at our customary 10% rate, the value of such a stream of dividends to shareholders has remained steady at $1.72 per share, rising to $2.77/share on the cusp of the company’s maiden dividend in FY26.

Q121 results summary

Auriant’s Q121 financial results were reported in the context of known production of 209.7kg from Tardan for the quarter (compared with our prior estimate of 191.9kg) and a largely known gold price. Notwithstanding a short maintenance stop, throughput rates were maintained at high levels and a summary of the plant’s performance during the quarter, relative to our prior expectations, is as follows:

Exhibit 1: Tardan CIL plant performance, Q120–Q121

Q120

Q220

Q320

Q420

Q121e

Q121a

Change*
(%)

Variance**
(%)

Ore processing (kt)

100

96

95

103

79

96

-6.9

+21.5

Grade (g/t)

3.04

2.69

2.58

2.35

2.64

2.04

-13.2

-22.7

Gold in ore processed (kg)

303

258

245

239

209

196

-18.0

-6.2

Gold in ore processed (oz)

9,742

8,295

7,880

7,685

6,705

6,296

-18.1

-6.1

Gold produced CIL (kg)

278

243

229

203

192

210

+3.4

+9.4

Gold produced CIL (oz)

8,946

7,804

7,363

6,517

6,169

6,743

+3.5

+9.3

Source: Auriant, Edison Investment Research. Note: *Q121 versus Q420. **Q121a versus Q121e.

Of note were the following:

Ore mined of 26kt during the quarter was unchanged compared with Q120; however, the volume of waste mined increased by a material 76.5%, to 413,000m3 as operations focused on stripping ore Zone 3 within the Tardan licence area ahead of mining in FY22.

For the quarter as a whole, the plant processed 96kt of ore, which was an excellent achievement given the requirement for a maintenance stop, and exceeded the average throughput rate achieved in FY20 of 44.9tph. In general, Auriant is budgeting a throughput rate of 87.5–95.0kt at the Tardan plant in FY21 to produce an average 217.5–225.0kg gold per quarter, implying a yield of 2.29–2.57g/t and a likely head grade in the range 2.49–2.79g/t.

The grade of ore processed declined to 2.04g/t for the quarter. This compared with a mined grade of 2.42g/t during the quarter (albeit a relatively modest tonnage of 26kt) and a start of period stockpile grade of 2.03g/t – implying that almost all of the material processed was derived from the Tardan stockpile at the start of the year with almost all of the mined material contributing to its end-of-period stockpile of 31kt at 2.30g/t. However, this is exactly the same as the pattern of ore mined and processed in FY20 (when stockpiled material was reduced to zero at the end of Q220 and then built up again to a peak in Q420 before being run down again in early 2021). All other things being equal, it suggests that the grade of material processed in Q221 will be 31kt at 2.30g/t plus c 64kt at the grade mined in Q221 (note that management’s guidance for the mined grade in FY21 is 2.56g/t, implying that the average for Q2–Q421 will be higher than the average for 2021, given that the mined grade for Q121 was lower than average). It compares with an average mined grade of 2.66g/t in FY20, which was within 2% of management’s prior guidance of 2.71g/t.

During the quarter, management reported a higher metallurgical recovery of 92.5%. As well as comparing favourably with Q420, metallurgical recovery in Q121 also compared favourably with our estimate of average metallurgical recoveries of 91.2% in FY20, which themselves exceeded management’s targeted recovery rate of 90% by 1.2 percentage points in that year.

Within the context of metallurgical recoveries, it is notable that Auriant produced more gold from its CIL plant in Q121 (209.7kg) than it processed (196.0kg) by a margin of 13.7kg (or 440oz, or 7.0%) which, in part, was responsible for the running down of ‘work in progress’ stocks, from US$4.1m at end-Q420 to US$2.5m at end-Q121.

For the fourth quarter in succession, Auriant sold less gold than it produced – in this case, by 29.7kg, or 955oz (Edison estimate), which depressed revenue by c $1.75m. Note that this sales result followed a comparable c 23.9kg (768oz) under-sale of gold in Q420, a 10.5kg (341oz) under-sale of gold in Q320 and a 23kg (748oz) under-sale in Q220. As a consequence, Auriant/Tardan has c 86.7kg (2,787oz) of unsold gold included in its ‘finished products’ inventory (worth c $5.21m at the current gold price of c $1,870/oz). Note that Auriant’s ‘finished products’ inventory is held on its balance sheet at $3.2m, being the lower of cost and net realisable value – implying an average ‘cost’ of production $1,151/oz (which reconciles closely with its Q121 cost of sales of $1,143/oz sold, including depreciation). Note that, in total, ‘work in progress’ and ‘finished products’ stocks on Auriant’s Q121 balance sheet have remained almost unchanged at $5,757k (compared with $5,754k at end-Q420), but that the nature of the stocks has substantially changed from the majority being ‘work in progress’ at end-Q420 to the majority being ‘finished products’ at end-Q121.

We estimate that Auriant’s cost of sales amounted to $49.57/t processed, which compared favourably with our prior estimate of $56.88/t and also the $59.28/t achieved in Q120, notwithstanding the higher level of waste stripping undertaken. The plant’s cash cost of sales of $57.83/t processed compared favourably with the $56.88/t achieved in Q420. This translated into an estimated cost of sales (excluding depreciation) of $705/oz (sold), which was similarly below our prior forecast of $728/oz.

Exhibit 2 summarises Auriant’s Q121 results both in the context of the prior quarter’s results and also our previous expectations. Relative to our prior expectations, the largest variance in Q1 results was a negative variance of $0.5m in revenues (largely on account of the under-sale of gold relative to production noted above), which was offset by a $0.5m positive variance in the depreciation charge. The third largest variance was a $0.3m negative variance in the tax charge. Nevertheless, although the effective tax rate of 27.6% was materially higher than our forecast rate of 15.6%, it was well within the normal range of variation historically observed at Auriant on a quarterly basis (see Exhibit 2, below). Notably, there was also a $0.2m positive variance in the interest expense after Auriant repaid all of its high-cost debt.

Exhibit 2: Auriant results, Q319–Q121e, by quarter ($000s*)

Q319

Q419

Q120

Q220

Q320

Q420

Q121e

Q121a

Change
***(%)

Variance
****(%)

Production

Tardan heap leach (kg)

202.3

95.4

0

0

0

0

0

0

N/A

N/A

Tardan CIL (kg)

0.0

110.0

278

243

229

203

191.9

209.7

3.3

9.3

Tardan total (kg)

202.3

205.4

278

243

229

203

191.9

209.7

3.3

9.3

Solcocon production (kg)

24.1

2.5

0

0

5

7

0

0

-100.0

N/A

Gold price ($/oz)

1,474

1,481**

1,585

1,713

1,911

1,875**

1,799

1,830

-2.4

1.7

Income statement

Revenue

10,007

8,975

16,154

12,276

13,832

11,147

11,100

10,591

-5.0

-4.6

Cost of sales

6,316

4,830

5,928

4,459

4,772

4,165

4,494

4,759

14.3

5.9

Gross profit

3,691

4,145

10,226

7,817

9,060

6,982

6,606

5,832

-16.5

-11.7

Depreciation

(1,142)

(1,652)

(1,647)

(1,846)

(2,278)

(2,283)

(2,308)

(1,857)

-18.7

-19.5

General & administration

(547)

(480)

(576)

(567)

(873)

(929)

(750)

(757)

-18.5

0.9

Other operating income

24

7

53

15

4

24

0

14

-41.7

N/A

Other operating expenses

(140)

(755)

(182)

(8)

(911)

(1,958)

(116)

(79)

-96.0

-31.9

Impairments etc

N/A

N/A

EBIT

1,886

1,265

7,874

5,411

5,002

1,836

3,432

3,153

71.7

-8.1

Interest income

0

0

0

0

0

0

0

N/A

N/A

Interest expense

(1,066)

(1,200)

(1,584)

(1,597)

(1,339)

(1,151)

(1,150)

-910

-20.9

-20.9

Net interest

(1,066)

(1,200)

(1,584)

(1,597)

(1,339)

(1,151)

(1,150)

-910

-20.9

-20.9

Forex gain/(loss)

448

(240)

(147)

128

(225)

(480)

118

-124.6

N/A

Profit before tax

1,268

(175)

6,143

3,942

3,438

205

2,282

2,361

1,051.7

3.5

Tax

(13)

445

248

1,275

475

1,077

355

652

-39.5

83.7

Effective tax rate (%)

(1.0)

(254.3)

4.0

32.3

13.8

525.4

15.6

27.6

-94.7

76.9

Profit after tax

1,281

(620)

5,895

2,667

2,963

(872)

1,927

1,709

-296.0

-11.3

Average no. shares (000s)

98,649

98,649

98,649

98,649

98,729

98,768

98,768

98,768

0.0

0.0

Derivatives (000s)

0

0

345

0

0

0

0

0

N/A

N/A

Fully diluted no. shares (000s)

98,649

98,649

98,994

98,649

98,729

98,768

98,768

98,768

0.0

0.0

EPS ($/share)

0.013

(0.006)

0.060

0.027

0.030

(0.009)

0.020

0.017

-288.9

-15.0

Diluted EPS ($/share)

0.013

(0.006)

0.060

0.027

0.030

(0.009)

0.020

0.017

-288.9

-15.0

Source: Edison Investment Research, Auriant Mining. Note: As reported. *Unless otherwise indicated. **Estimate. ***Q121 versus Q420. ****Q121a versus Q121e.

In 2020, Tardan became a participant in the Regional Investment Projects programme and obtained the right to apply a reduced income tax rate of 17% and the mineral extraction tax at a nil rate. According to Russian legislation, tax losses are accumulated on the balance sheet and can be offset against future taxable earnings. Thus, in Q121 only $152k was paid in cash tax out of a total charge on the income statement of $652k, with the remainder being offset against the balance sheet amount of the deferred tax asset related to tax losses carried forward. Compared with a normalised estimate of cash flow from the income statement of $3.6m ($1.7m in earnings plus $1.9m depreciation) therefore, actual cash flow from operations amounted to $4.5m (including evidence of diligent control of working capital), of which only $1.4m was consumed in investing activities and the remainder used to pay interest and to repay debt (including leases).


Guidance and assumptions

FY21

Production

On 21 December, Auriant announced total production guidance for 2021 of 900–930kg gold from Tardan and Solcocon combined (compared with 953kg produced in FY20) from 350–380kt of ore processed through the Tardan CIL plant. This guidance was reiterated at the time of its Q121 results. Assuming production of c 30–36kg from Solcocon, this total implies production from the Tardan CIL plant of c 885kg at a yield of 2.42g/t and a head grade of c 2.64g/t. As in FY20, relatively little seasonal variation in production is anticipated (in sharp contrast to the former heap leach operation).

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 has allowed it to minimise its use of diesel generators on site and, on occasion, to stop using them entirely. Unit costs are nevertheless expected to be broadly unchanged in US dollar terms in FY21 relative to FY20, reflecting some inflationary pressures in local currency terms (given something of a ‘boom’ in resources investment in Russia in addition to normal staff salary indexation). At the same time, the rouble has appreciated by 1.3%, from RUB74.0979/US$ at the time of our last note (see Making a virtue of dependability, published on 17 March 2021) to RUB73.1640/US$ at the time of writing, while the oil price has increased c 80% since this time last year. Finally, as discussed previously, stripping costs delayed from FY20 are now being incurred in FY21.

FY21 quarterly forecasts

Based on the production guidance provided by management for FY21 (and with the usual caveat surrounding quarterly predictions), our financial forecasts for Auriant for FY21 by quarter are as shown in Exhibit 3.

Relative to our prior forecasts, the main changes that we have made to our forecasts are:

An increase in the average gold price, from $1,726/oz to $1,870/oz for the remainder of the year.

A 9.8% reduction in the grade of material processed in Q221, from 2.64g/t to 2.38g/t, to reflect the grade of the mined material in Q121 and the grade of the warehoused material at end-Q121.

A decreased interest rate and interest charge applied to debt to reflect the full repayment of high-interest loans.

The deferment of an assumed $20m equity raise until the beginning of FY22 to part fund Kara-Beldyr.

Exhibit 3: Auriant estimates, Q121–Q421e, by quarter ($000s*)

Q121a

Q221e
(previous)

Q221e
(current)

Q321e
(previous)

Q321e
(current)

Q421e
(previous)

Q421e
(current)

FY21e
(current)

FY21e
(previous)

Production

Tardan heap leach (kg)

0

0

0

0

0

0

0

0

0

Tardan CIL (kg)

209.7

231

208

231

231

231

231

879

884

Tardan total (kg)

209.7

231

208

231

231

231

231

879

884

Solcocon production (kg)

0

6

6

24

24

6

6

36

36

Gold price ($/oz)

1,830

1,726

1,830

1,726

1,870

1,726

1,870

1,852

1,741

Income statement

Revenue

10,591

13,137

12,592

14,136

15,315

13,137

14,233

52,731

51,510

Cost of sales

4,759

5,640

5,655

6,350

6,428

5,640

5,660

22,502

22,124

Gross profit

5,832

7,497

6,937

7,786

8,887

7,497

8,573

30,229

29,386

Depreciation

(1,857)

(2,333)

-1,882

(2,358)

-1,907

(2,383)

-1,932

(7,578)

(9,382)

General & administration

(757)

(750)

-750

(750)

-750

(750)

-750

(3,007)

(3,000)

Other operating income

14

0

0

0

0

0

0

14

0

Other operating expenses

(79)

(116)

-116

(116)

-116

(116)

-116

(427)

(464)

Impairments etc

0

0

EBIT

3,153

4,298

4,189

4,562

6,114

4,248

5,775

19,231

16,540

Interest income

0

0

0

Interest expense

-910

(1,088)

-888

(1,012)

-833

(931)

-755

(3,386)

(4,181)

Net interest

-910

(1,088)

-888

(1,012)

-833

(931)

-755

(3,386)

(4,181)

Forex gain/(loss)

118

118

0

Profit before tax

2,361

3,210

3,301

3,550

5,281

3,317

5,020

15,963

12,359

Tax

652

500

513

553

821

516

781

2,767

1,923

Marginal tax rate (%)

27.6

15.6

15.6

15.6

15.6

15.6

15.6

17.3

15.6

Profit after tax

1,709

2,710

2,788

2,998

4,460

2,800

4,239

13,196

10,436

Average no. shares (000s)

98,768

98,768

98,768

135,393

98,768

135,393

98,768

98,768

117,081

Derivatives (000s)

0

0

0

0

0

0

0

0

0

Fully diluted no. shares (000s)

98,768

98,768

98,768

135,393

98,768

135,393

98,768

98,768

117,081

EPS ($/share)

0.017

0.027

0.028

0.022

0.045

0.021

0.043

0.134

0.089

Diluted EPS ($/share)

0.017

0.027

0.028

0.022

0.045

0.021

0.043

0.134

0.089

Source: Edison Investment Research. Note: *Unless otherwise indicated.

Valuation steady at $1.72/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 and the Kara-Beldyr projects according to the operational and financial parameters anticipated, we estimate that Auriant is capable of generating average cash flows of $63.5m, average earnings of $54.8m and average EPS of 40.9c in the 10 years from FY25–34, thus allowing it to pay maximum potential dividends to shareholders of 46.3c per share in the period FY26–34. Discounted at our customary 10% discount rate, such a stream of dividends has a value of $1.72 per share (cf $1.76/share previously), as shown in the exhibit below, rising to $2.77/share on the cusp of the company’s maiden dividend in FY26. Note: readers should note that, effectively, the sole reason for the (albeit modest) decline in our valuation of Auriant, from $1.76/share to $1.72/share, is the decline in its share price from SEK5.08 at the time of our last report to SEK4.70 currently, thereby increasing future assumed dilution (see Sensitivities and risks, below). In the absence of this factor, our valuation would have otherwise remained steady, at $1.75/share.

Exhibit 4: Auriant forecast EPS and maximum potential DPS, FY15–35e

Source: Edison Investment Research

Our approach to gold price forecasting, and the gold prices underlying our earnings and dividend assumptions, is set out in our note, A golden future, published in June 2020. Readers should also note that our valuation specifically excludes any value attributable to Solcocon beyond FY21 on account of the variable nature of alluvial mining operations. However, it is possible that activities at Solcocon may be reconfigured in due course 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 relating to management’s ability to bring the Kara-Beldyr project in particular to account within its geographical jurisdiction at the required technical and economic parameters (note however that this risk has already been substantially mitigated by management’s success in developing the Tardan CIL project). Once in production, these risks will reduce and be partially replaced by others, such as commercial, commodity price, foreign exchange and global economic risks.

However, one specific risk that bears further, immediate consideration from an empirical perspective is funding. In this particular case, our valuation sensitivity to the price at which Auriant raises an assumed $20m in equity for Kara-Beldyr (assumed at the start of FY22) is shown below:

Exhibit 5: Valuation sensitivity to equity funding price

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

-36.2

-25.5

-14.9

-4.3

0.0

+6.4

+17.0

+27.7

+38.3

Equity fund-raising price (SEK)

3.00

3.50

4.00

4.50

4.70

5.00

5.50

6.00

6.50

Valuation ($/share)

1.49

1.58

1.64

1.70

1.72

1.75

1.79

1.82

1.85

Valuation (SEK/share)*

12.41

13.16

13.66

14.16

14.33

14.58

14.91

15.16

15.41

Change cf ‘base case’ (%)

-13.4

-8.1

-4.7

-1.1

0.0

+1.7

+4.1

+5.8

+7.6

Source: Edison Investment Research. Note: *Converted at the prevailing FX rate of SEK8.3314/$.

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 compared to 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 $2.18/share at the start of FY21 (albeit with a correspondingly higher maximum debt level of $76.9m (cf $54.0m in the ‘base case’ scenario, in the ‘Financials’ section, below).

Financials

At end-March 2021, Auriant had net debt of $64.2m (cf $65.7m at end-Q420) on its balance sheet, but $66.1m (cf $67.2m at end-Q420) if lease liabilities are included. While, at first glance, net debt has fallen by only $1.5m during the quarter (excluding lease liabilities), we note that it would have fallen by $3.3m if all the gold produced had been sold and by $6.7m if all the gold currently held in inventory had also been sold. Assuming the company raises an additional SEK166.6m ($20m) in cash via equity funding at the start of FY22 (cf mid-FY21 previously), we forecast that its net debt will evolve as follows until FY25, before being eliminated in FY26:

Exhibit 6: Auriant forecast net debt evolution, FY20–25e ($m)

End-year

FY20

FY21e

FY22e

FY23e

FY24e

FY25e

Net debt (current estimates)

67.2

63.4

40.9

55.9

51.5

16.6

Source: Auriant Mining accounts, Edison Investment Research

Note that our estimate of Auriant’s maximum (future) net debt requirement of $55.9m (cf $56.2m previously) at end-FY23 equates to a leverage ratio (net debt/(net debt+equity)) of 48.2% (cf 50.5% previously).

Current COVID-19 situation

Mining operations at Tardan continue to operate, to all intents and purposes, as normal. 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. To date, quarantine measures are reported to have had an insignificant effect on the mine’s operations. Further measures will depend on employee 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, infected employees are released from observation once two negative test results at least one day apart have been obtained. In the meantime, alluvial gold mining operations at Solcocon are reported to have commenced in Q221, to all intents and purposes, unaffected by the pandemic.

Exhibit 7: Financial summary

US$'000s

2015

2016

2017

2018

2019

2020

2021e

2022e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

33,429

43,380

33,532

17,373

29,762

53,409

52,731

55,577

Cost of Sales

(19,360)

(19,391)

(25,061)

(16,790)

(19,610)

(19,324)

(22,502)

(17,600)

Gross Profit

14,069

23,989

8,471

583

10,152

34,085

30,229

37,977

EBITDA

 

 

10,242

21,987

8,846

(1,714)

7,208

31,236

26,809

34,977

Operating Profit (before amort. and except.)

 

919

15,416

2,487

(6,373)

2,197

23,182

19,231

26,999

Intangible Amortisation

0

0

0

0

0

0

0

0

Exceptionals

(14,216)

0

(104)

0

0

(3,059)

0

0

Other

0

0

1,027

(1,763)

679

0

118

0

Operating Profit

(13,297)

15,416

3,410

(8,136)

2,876

20,123

19,349

26,999

Net Interest

(7,081)

(7,577)

(5,568)

(3,798)

(4,390)

(6,606)

(3,386)

(3,171)

Profit Before Tax (norm)

 

 

(6,162)

7,839

(3,081)

(10,171)

(2,193)

16,576

15,845

23,828

Profit Before Tax (FRS 3)

 

 

(20,378)

7,839

(2,158)

(11,934)

(1,514)

13,517

15,963

23,828

Tax

(1,116)

(1,355)

(28)

1,831

278

(3,075)

(2,767)

(5,716)

Profit After Tax (norm)

(7,278)

6,484

(2,082)

(10,103)

(1,236)

13,501

13,196

18,112

Profit After Tax (FRS 3)

(21,494)

6,484

(2,186)

(10,103)

(1,236)

10,442

13,196

18,112

Average Number of Shares Outstanding (m)

17.8

17.8

35.6

92.7

98.6

98.7

98.8

134.2

EPS - normalised (c)

 

 

(40.9)

36.4

(5.8)

(10.9)

(1.3)

13.7

13.4

13.5

EPS - normalised and fully diluted (c)

 

 

(35.8)

35.1

(5.7)

(10.8)

(1.2)

13.7

13.4

13.5

EPS - (IFRS) (c)

 

 

(120.7)

36.4

(6.1)

(10.9)

(1.3)

10.6

13.4

13.5

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

63.8

57.3

68.3

EBITDA Margin (%)

30.6

50.7

26.4

-9.9

24.2

58.5

50.8

62.9

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

2.7

35.5

7.4

-36.7

7.4

43.4

36.5

48.6

BALANCE SHEET

Fixed Assets

 

 

56,192

53,684

49,397

57,690

63,685

54,183

60,493

75,094

Intangible Assets

32,197

32,638

30,183

30,525

30,133

23,952

25,482

27,182

Tangible Assets

23,995

21,046

19,214

27,165

33,552

30,231

35,011

47,912

Investments

0

0

0

0

0

0

0

0

Current Assets

 

 

10,460

17,062

19,102

8,436

10,050

10,687

17,230

40,339

Stocks

4,833

7,883

7,425

3,753

5,057

7,449

8,789

9,263

Debtors

2,272

186

5,148

3,298

4,111

1,455

2,889

3,045

Cash

43

4,173

5,069

1,189

145

422

4,191

26,670

Other

3,312

4,820

1,460

196

737

1,361

1,361

1,361

Current Liabilities

 

 

(36,001)

(34,149)

(6,179)

(16,227)

(29,189)

(16,498)

(16,154)

(15,752)

Creditors

(5,901)

(3,537)

(2,005)

(1,828)

(6,147)

(2,193)

(1,849)

(1,447)

Short term borrowings

(30,100)

(30,612)

(4,174)

(14,399)

(23,042)

(14,305)

(14,305)

(14,305)

Long Term Liabilities

 

 

(70,307)

(66,995)

(82,054)

(73,053)

(68,864)

(61,649)

(61,649)

(61,649)

Long term borrowings

(61,366)

(58,117)

(71,098)

(62,671)

(59,781)

(53,306)

(53,306)

(53,306)

Other long term liabilities

(8,941)

(8,878)

(10,956)

(10,382)

(9,083)

(8,343)

(8,343)

(8,343)

Net Assets

 

 

(39,656)

(30,398)

(19,734)

(23,154)

(24,318)

(13,277)

(80)

38,032

CASH FLOW

Operating Cash Flow

 

 

6,347

19,359

9,752

3,992

9,185

26,649

24,231

34,110

Net Interest

(7,081)

(7,577)

(5,568)

(3,798)

(4,390)

(6,606)

(3,386)

(3,171)

Tax

(13)

(27)

(79)

(58)

0

(674)

(2,767)

(5,716)

Capex

(118)

(2,391)

(3,025)

(8,605)

(9,556)

(3,822)

(14,310)

(22,745)

Acquisitions/disposals

0

0

0

0

0

0

0

0

Financing

49

(10)

5,424

2,367

11

(272)

0

20,000

Dividends

0

0

0

0

0

0

0

0

Net Cash Flow

(816)

9,354

6,504

(6,102)

(4,750)

15,275

3,768

22,479

Opening net debt/(cash)

 

 

90,607

91,423

84,556

70,203

75,881

82,678

67,189

63,420

HP finance leases initiated

0

0

0

0

0

0

0

0

Other

0

(2,487)

7,849

424

(2,047)

214

0

(0)

Closing net debt/(cash)

 

 

91,423

84,556

70,203

75,881

82,678

67,189

63,421

40,941

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 2021 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

1185 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

1185 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 2021 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

1185 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

1185 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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