gold water

Turning into the home straight

Auriant Mining 23 December 2020 Update
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Auriant Mining

Turning into the home straight

Q320 results and FY21 guidance

Metals & mining

23 December 2020

Price

SEK5.46

Market cap

SEK539m

RUB75.1712/US$; SEK8.3948/US$

Net debt (US$m) at end-September

67.0

Shares in issue (000s)

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

(11.4)

(9.0)

61.1

Rel (local)

(11.2)

(14.8)

45.7

52-week high/low

SEK7.18

SEK2.95

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

Q420 results

26 February 2021

AGM

11 May 2021

FY20 annual report

30 April 2021

Q121 results

31 May 2021

Analyst

Charles Gibson

+44 (0)20 3077 5724

Auriant Mining is a research client of Edison Investment Research Limited

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.

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

53.9

16.5

14.0

0.0

4.6

N/A

12/21e

55.3

16.7

10.9

0.0

6.0

N/A

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

FY21 guidance

On 21 December, Auriant announced total production guidance for 2021 of 900–930kg gold from 350–380kt of ore processed, implying production from the Tardan CIL plant of c 885kg at a head grade of 2.64g/t. This is in line with recent performance, but 7.7% lower than our previous FY21e production estimate and reflects the delay to stripping at Tardan in FY20 as a result of a licence restriction, which was totally lifted from 2 November (see page 7).

Net debt declining at a rate of $20.9m per year

Net debt at Auriant declined by $5.9m (8.1%) in Q3 alone (including lease obligations). To date, in FY20, it has declined by $15.7m, or the equivalent of $5.2m per quarter, or $20.9m per year.

Valuation: Steady at $1.71 (SEK14.36) per share

On the basis that management executes the Kara-Beldyr project according to the operational and financial parameters expected (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 $61.6m, average earnings of $52.7m and average EPS of $0.407 from FY25–34, thus allowing it to pay (average) maximum potential dividends of 45.8c/share in FY26–34. Discounted at our customary 10% discount rate, the value of such a stream of dividends to shareholders has remained steady at $1.71 per share, rising to $2.75/share on the cusp of the company’s maiden dividend in FY26.

Q320 results

Auriant’s Q320 financial results were reported within the context of known production of 229kg from Tardan for the quarter (cf 243kg in Q220 and 278kg in Q120) and a largely known gold price. While lower than in the previous two quarters, production was nevertheless consistent with the achievement of steady-state operations at the company’s new carbon-in-leach plant:

The plant’s targeted throughput rate is 50tph. In the event, it processed 95kt of ore (cf 96kt in Q220 and 100kt in Q120), which is an excellent achievement given the requirement for downtime and maintenance etc. In general, Auriant is budgeting a throughput rate of 80.0–82.5kt at the Tardan plant to produce an average 225kg gold per quarter.

The grade of ore processed declined to 2.58g/t (cf 2.69g/t in Q2), which was 6.2% below our prior forecast of 2.75g/t. However, it remains consistent with management’s expectation of mined grade for the full year of 2.71g/t.

In terms of metallurgical recovery, the CIL plant has continued to perform above expectations. During the quarter, we estimate that metallurgical recovery moderated to 93.4% (cf 94.2% in Q220). However, this nevertheless remains 3.4 percentage points above management’s targeted recovery rate of 90%.

Estimated cash costs of $47.78/t at Tardan in Q320 (cf $55.58/t in Q220 and $48.96/t in Q120) were below our prior expectation of $55.30/t. This, in turn, translated into an estimated cash cost of sales (ie excluding depreciation) at Tardan of $616/oz (sold), which was again below our prior forecast of $680/oz.

For the second quarter in succession, Auriant sold less gold than it produced – in this case, by about 10.5kg, or 341oz, which depressed revenue by $652k. This sales result compared with a comparable 23kg (748oz) sales shortfall in Q220, but a 39kg (1,247oz) over-sale of gold in Q120.

Exhibit 1 summarises Auriant’s Q320 results both within the context of the prior quarter’s results and also Edison’s prior expectations. Relative to our prior expectations, the largest variance in Q3 results was in the production of only 5kg of gold from alluvial operations at Solcocon cf our prior forecast of 25kg (and the company’s end-August production guidance of 20–40kg for FY20) as a consequence of the disruption to the contractor’s mine plan engendered by the coronavirus. This factor alone was responsible for 48% of the negative variance in revenue relative to our forecasts. However, the shortfall in revenue was inevitably partly offset by an absence of costs from Solcocon, plus an excellent cost performance at Tardan (see above), which resulted in gross profits being within 10% of our prior expectations. Other negative variances were of a somewhat one-off, or exceptional, nature, including contractual termination benefits payable in respect of the former CEO and chief geologist (included in general and administrative expenses) and the write off of a VAT refund asset within a subsidiary called LLC Rudtechnology (included in other operating expenses). The aggregate effect of these was to almost exactly double the negative variance of actual results relative to our forecasts at the EBIT level relative to the gross profit level in US dollar terms (see Exhibit 1). Nevertheless, compared with the prior year, the transformation in Auriant’s financial fortunes as a result of its development of a CIL plant in place of the former heap leach operation is readily apparent. For the nine months to end-September, EBITDA has increased by a factor of almost 6x, to $24.9m, while cash flows from operations have increased almost fourfold, to $23.0m.

Exhibit 1 also presents our updated forecasts for Q420, 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 the remaining quarter of the year and our updated full-year expectations. Relative to our prior forecasts, the main changes that we have made to our Q4 forecasts are:

A reduction in the average gold price, from $1,964/oz to $1,876/oz.

A reduction in gold produced at Solcocon from 12.5kg to 6kg, such that it is in line with management’s updated guidance of 10–12kg for FY20.

A reduction in the interest expense in Q420, reflecting both the $5.9m decline in net indebtedness over the course of Q320 and also the renegotiation of the group’s loans with VTB to reduce the interest rate.

Exhibit 1: Auriant results, Q219–Q420e, by quarter ($000s*)

Q219

Q319

Q419

FY19

Q120

Q220

Q320e

Q320a

Change
***(%)

Variance
****(%)

Q420e

FY20e

FY20e
(prior)

Production

Tardan heap leach (kg)

141.1

202.3

95.4

525.0

0

0

0

0

N/A

N/A

0

0

0

Tardan CIL (kg)

0.0

0.0

110.0

110.0

278

243

240

229

-5.8

-4.6

186

936

948

Tardan total (kg)

141.1

202.3

205.4

635.0

278

243

240

229

-5.8

-4.6

186

936

948

Solcocon production (kg)

27.4

24.1

2.5

54.0

0

0

25

5

N/A

-80.0

6

11

38

Gold price ($/oz)

1,308

1,474

**1,481

1,416

1,585

1,713

1,923

1,911

11.6

-0.6

1,876

1,748

1,777

 

 

Income statement

 

 

Revenue

6,638

10,007

8,975

29,762

16,154

12,276

16,408

13,832

12.7

-15.7

11,605

53,867

57,401

Cost of sales

5,221

6,316

4,830

19,610

5,928

4,459

6,353

4,772

7.0

-24.9

4,551

19,710

21,646

Gross profit

1,417

3,691

4,145

10,152

10,226

7,817

10,055

9,060

15.9

-9.9

7,054

34,157

35,754

Depreciation

(984)

(1,142)

(1,652)

(5,011)

(1,647)

(1,846)

(1,901)

(2,278)

23.4

19.8

(2,333)

(8,104)

(7,350)

General & administration

(527)

(547)

(480)

(2,184)

(576)

(567)

(668)

(873)

54.0

30.7

(668)

(2,684)

(2,479)

Other operating income

190

24

7

241

53

15

0

4

-73.3

N/A

0

72

68

Other operating expenses

(45)

(140)

(755)

(1,001)

(182)

(8)

(116)

(911)

11,287.5

685.3

(116)

(1,217)

(422)

Impairments etc

N/A

N/A

0

0

EBIT

51

1,886

1,265

2,197

7,874

5,411

7,370

5,002

-7.6

-32.1

3,937

22,224

25,571

Interest income

0

0

0

0

0

0

0

N/A

N/A

0

0

Interest expense

(1,120)

(1,066)

(1,200)

(4,390)

(1,584)

(1,597)

(1,717)

(1,339)

-16.2

-22.0

(1,231)

(5,751)

(6,614)

Net interest

(1,120)

(1,066)

(1,200)

(4,390)

(1,584)

(1,597)

(1,717)

(1,339)

-16.2

-22.0

(1,231)

(5,751)

(6,614)

Forex gain/(loss)

209

448

(240)

679

(147)

128

(225)

-275.8

N/A

(244)

(19)

Profit before tax

(860)

1,268

(175)

(1,514)

6,143

3,942

5,654

3,438

-12.8

-39.2

2,706

16,229

18,938

Tax

(608)

(13)

445

(278)

248

1,275

808

475

-62.7

-41.2

416

2,414

2,789

Marginal tax rate

70.7

(1.0)

(254.3)

18.4

4.0

32.3

14.3

13.8

-57.3

-3.5

15.4

14.9

14.7

Profit after tax

(252)

1,281

(620)

(1,236)

5,895

2,667

4,845

2,963

11.1

-38.8

2,289

13,814

16,149

 

 

Average no. shares (000s)

98,649

98,649

98,649

98,649

98,649

98,649

98,649

98,729

0.1

0.1

98,768

98,698

105,400

Derivatives (000s)

0.000

0

0

0

345

0

345

0

N/A

-100.0

0

0

345

Fully diluted no. shares (000s)

98,649

98,649

98,649

98,649

98,994

98,649

98,994

98,729

0.1

-0.3

98,768

98,698

105,745

 

 

EPS ($/share)

(0.003)

0.013

(0.006)

(0.013)

0.060

0.027

0.049

0.030

11.1

-38.8

0.023

0.140

0.153

Diluted EPS ($/share)

(0.003)

0.013

(0.006)

(0.013)

0.060

0.027

0.049

0.030

11.1

-38.8

0.023

0.140

0.153

Source: Edison Investment Research, Auriant Mining. Note: *Unless otherwise indicated. **Estimate. ***Q320 vs Q220. ****Q320a vs Q320e.

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 Q320 no income tax was paid with the notional tax charge fully 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 $5.2m ($3.0m earnings plus $2.3 depreciation) therefore, actual cash flow from operations amounted to $8.3m (including evidence of diligent control of working capital), of which only $0.6m was consumed in investing activities and the majority of the remainder used to repay debt.

Guidance and assumptions

FY20

Auriant’s 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 (unchanged) expectation that its mined grade will average 2.71g/t in FY20. These parameters form the basis of our financial and operating forecasts for the remainder of the year (see Exhibit 1). As a result, we are forecasting gold production for Tardan for FY20 to be at the top of management’s guidance range, at 936kg.

FY21

On 21 December, Auriant announced total production guidance for 2021 of 900–930kg gold from 350–380kt of ore processed through the CIL plant from the Pravoberezhniy deposit. The total includes an assumed c 30kg being produced at Solcocon, implying production from the Tardan CIL plant of c 885kg, a yield of 2.42g/t and a head grade of 2.64g/t. This is 7.7% lower than our previous forecast of 959kg gold produced from 320kt throughput, but is consistent with the recent performance of the mining operation and CIL plant and reflects the delay to stripping at Tardan in FY20 as a result of changes to mine sequencing necessitated by a licence restriction, which was fully lifted from 2 November 2020 onwards (see page 7). As in FY20, relatively little seasonal variation in production is anticipated (in sharp contrast to the former heap leach operation). However, both Q420 and Q121 will be slightly affected by a scheduled maintenance stop, which is reflected in our production expectations for these quarters (see Exhibit 2).

Costs

FY20

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 or, possibly, to cease their use entirely. Both have a potentially beneficial effect on costs, as will the recent depreciation of the rouble, from RUB73.7065/US$ at the time of our last note (see Maintaining momentum, published on 3 September 2020) to RUB75.1712/US$, and the general weakness in the oil price in FY20.

FY21

Unit costs are expected to be broadly unchanged in US dollar terms in FY21 relative to FY20, albeit reflecting some inflationary pressures in local currency terms (given something of a ‘boom’ in resources investment in Russia) offset by a decline in the value of the rouble relative to the US dollar. However, staff costs appear likely to rise as a result of local inflation and salary indexation and, as a consequence, there is expected to be little or no improvement in budgeted exploration expenses

Stripping costs delayed from FY20 are now also expected to be incurred in FY21.

FY21 quarterly forecasts

On the basis of the production guidance provided by management for FY21 (and with the usual caveat surrounding quarterly predictions), our financial forecasts for Auriant, for the year, by quarter, are as follows:

Exhibit 2: Auriant results, Q121–Q421e, by quarter ($000s*)

Q121

Q221

Q321

Q421

FY21

Production

Tardan heap leach (kg)

0

0

0

0

0

Tardan CIL (kg)

192

231

231

231

884

Tardan total (kg)

192

231

231

231

884

Solcocon production (kg)

0

5

20

5

30

Gold price ($/oz)

1,880

1,880

1,880

1,880

1,880

Income statement

Revenue

11,598

14,249

15,155

14,249

55,251

Cost of sales

4,366

5,465

6,109

5,465

21,405

Gross profit

7,232

8,784

9,047

8,784

33,846

Depreciation

(2,358)

(2,383)

(2,408)

(2,433)

(9,582)

General & administration

(750)

(750)

(750)

(750)

(3,000)

Other operating income

0

0

0

0

0

Other operating expenses

(116)

(116)

(116)

(116)

(464)

Impairments etc

0

EBIT

4,008

5,535

5,773

5,485

20,800

Interest income

0

Interest expense

(1,163)

(1,088)

(986)

(880)

(4,117)

Net interest

(1,163)

(1,088)

(986)

(880)

(4,117)

Forex gain/(loss)

0

Profit before tax

2,844

4,447

4,786

4,605

16,683

Tax

444

694

746

718

2,602

Marginal tax rate

15.6

15.6

15.6

15.6

15.6

Profit after tax

2,401

3,754

4,040

3,887

14,081

Average no. shares (000s)

129,518.453

129,518.453

129,518.453

129,518.453

129,518.453

Derivatives (000s)

0.000

0.000

0.000

0.000

0.000

Fully diluted no. shares (000s)

129,518.453

129,518.453

129,518.453

129,518.453

129,518.453

EPS ($/share)

0.019

0.029

0.031

0.030

0.109

Diluted EPS ($/share)

0.019

0.029

0.031

0.030

0.109

Source: Edison Investment Research, Auriant Mining. Note: *Unless otherwise indicated.

Kara-Beldyr timing

Owing to delays in progress occasioned by the coronavirus crisis, plus uncertainty surrounding the timing of the development of grid electricity in the region of Kara-Beldyr, we have put back our assumption regarding the likely timeline for the construction of the mine by one year, such that we are now expecting first production in FY24 and the first full year of production in FY25 (cf FY23 and FY24, respectively, previously).

Valuation steady at $1.71/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 $61.6m, average earnings of $52.7m and average EPS of 40.7c in the ten years from FY25–34 (inclusive), thus allowing it to pay maximum potential dividends to shareholders of 45.8c per share in the period FY26-FY34. Discounted at our customary 10% discount rate, such a stream of dividends has a value of $1.71 per share (cf $1.76/share previously), as shown in the exhibit below, rising to $2.75/share on the cusp of the company’s maiden dividend in FY26.

Exhibit 3: Auriant forecast EPS and maximum potential DPS, FY15–35e

Source: Edison Investment Research

Note that our valuation specifically excludes any value attributable to Solcocon 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, 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 $20m equity funding relating to Kara-Beldry is conducted is shown in the exhibit below:

Exhibit 4: Valuation sensitivity to equity funding price

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

Equity fundraising price (SEK)

4.50

5.00

5.46

5.50

6.00

6.50

7.00

7.50

Valuation ($/share)

1.63

1.67

1.71

1.71

1.74

1.78

1.80

1.83

Valuation (SEK/share)*

13.68

14.02

14.36

14.36

14.61

14.94

15.11

15.36

Change cf ‘base case’ (%)

-4.7

-2.3

u/c

u/c

+1.8

+4.1

+5.3

+7.0

Source: Edison Investment Research. Note: *Converted at the prevailing forex rate of SEK8.3948/$.

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 $2.07/share (albeit with a correspondingly higher maximum debt level of $75.4m (cf $52.0m in the ‘base case’ scenario, in the ‘Financials’ section, below)).

Financials

At end-September 2020, Auriant had net debt of $67.0m on its balance sheet, a decline of $5.9m relative to the $72.9m that it had on its balance sheet at end-June (including leases payable). 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 SEK167.9m ($20m) in cash via equity funding in the near future, we forecast 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

59.5

35.0

33.6

52.0

49.8

20.3

Source: Auriant Mining accounts, Edison Investment Research

Note that our estimate of Auriant’s maximum (future) net debt requirement of $52.0m at end-FY22 equates to a leverage ratio (net debt/(net debt+equity)) of 48.3%.

Rosprirodnadzor inspection

Earlier in November, Auriant announced that its subsoil use rights at the Tardan deposit (which had been suspended since August 2019) had been restored in full by the Russian Subsoil Use Agency, Rosnedra.

The suspension followed an inspection carried out by the Russian state supervisory authority Rosprirodnadzor in July-August 2019. After the inspection, Tardan received an order that it should not carry out mining activities at the Tardan deposit until approved to do so by Rosnedra. This approval has now been granted and Rosnedra has therefore issued an order to remove the restrictions with immediate effect.

As previously noted by Edison, Tardan Gold challenged some of the findings of Rosprirodnadzor’s inspection in court. The court found that the inspection lacked legal grounds and that therefore Rosprirodnadzor’s findings had no legal effect. Nevertheless, Tardan has rectified several shortcomings identified during the inspection and Auriant notes that its subsidiary is now fully compliant with all applicable subsoil use and environmental laws and regulations.

Readers should note however that neither the original suspension nor its subsequent lifting had any material effect on the operations of Auriant, given that the ore for the CIL plant was supplied from the Pravoberezhny deposit (as distinct from the Tardan one), which was never affected by the restriction.

COVID-19

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, the 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.

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

53,867

55,251

51,375

Cost of Sales

(19,360)

(19,391)

(25,061)

(16,790)

(19,610)

(19,710)

(21,405)

(17,103)

Gross Profit

14,069

23,989

8,471

583

10,152

34,157

33,846

34,271

EBITDA

 

 

10,242

21,987

8,846

(1,714)

7,208

30,328

30,382

31,271

Operating Profit (before amort. and except.)

 

919

15,416

2,487

(6,373)

2,197

22,224

20,800

21,289

Intangible Amortisation

0

0

0

0

0

0

0

0

Exceptionals

(14,216)

0

(104)

0

0

0

0

0

Other

0

0

1,027

(1,763)

679

(244)

0

0

Operating Profit

(13,297)

15,416

3,410

(8,136)

2,876

21,980

20,800

21,289

Net Interest

(7,081)

(7,577)

(5,568)

(3,798)

(4,390)

(5,751)

(4,117)

(2,804)

Profit Before Tax (norm)

 

 

(6,162)

7,839

(3,081)

(10,171)

(2,193)

16,473

16,683

18,486

Profit Before Tax (FRS 3)

 

 

(20,378)

7,839

(2,158)

(11,934)

(1,514)

16,229

16,683

18,486

Tax

(1,116)

(1,355)

(28)

1,831

278

(2,414)

(2,602)

(4,975)

Profit After Tax (norm)

(7,278)

6,484

(2,082)

(10,103)

(1,236)

13,814

14,081

13,511

Profit After Tax (FRS 3)

(21,494)

6,484

(2,186)

(10,103)

(1,236)

13,814

14,081

13,511

Average Number of Shares Outstanding (m)

17.8

17.8

35.6

92.7

98.6

98.7

129.5

129.5

EPS - normalised (c)

 

 

(40.9)

36.4

(5.8)

(10.9)

(1.3)

14.0

10.9

10.4

EPS - normalised and fully diluted (c)

 

 

(35.8)

35.1

(5.7)

(10.8)

(1.2)

14.0

10.9

10.4

EPS - (IFRS) (c)

 

 

(120.7)

36.4

(6.1)

(10.9)

(1.3)

14.0

10.9

10.4

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

63.4

61.3

66.7

EBITDA Margin (%)

30.6

50.7

26.4

-9.9

24.2

56.3

55.0

60.9

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

2.7

35.5

7.4

-36.7

7.4

41.3

37.6

41.4

BALANCE SHEET

Fixed Assets

 

 

56,192

53,684

49,397

57,690

63,685

55,744

60,051

72,647

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

23,891

26,668

37,564

Investments

0

0

0

0

0

0

0

0

Current Assets

 

 

10,460

17,062

19,102

8,436

10,050

30,027

60,751

61,312

Stocks

4,833

7,883

7,425

3,753

5,057

4,489

9,208

8,562

Debtors

2,272

186

5,148

3,298

4,111

1,476

3,027

2,815

Cash

43

4,173

5,069

1,189

145

23,325

47,778

49,198

Other

3,312

4,820

1,460

196

737

737

737

737

Current Liabilities

 

 

(36,001)

(34,149)

(6,179)

(16,227)

(29,189)

(27,411)

(28,360)

(28,007)

Creditors

(5,901)

(3,537)

(2,005)

(1,828)

(6,147)

(4,369)

(5,318)

(4,965)

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)

(10,504)

23,577

37,089

CASH FLOW

Operating Cash Flow

 

 

6,347

19,359

9,752

3,992

9,185

35,890

25,482

31,943

Net Interest

(7,081)

(7,577)

(5,568)

(3,798)

(4,390)

(5,751)

(4,117)

(2,804)

Tax

(13)

(27)

(79)

(58)

0

(2,414)

(2,602)

(4,975)

Capex

(118)

(2,391)

(3,025)

(8,605)

(9,556)

(4,544)

(14,310)

(22,745)

Acquisitions/disposals

0

0

0

0

0

0

0

0

Financing

49

(10)

5,424

2,367

11

0

20,000

0

Dividends

0

0

0

0

0

0

0

0

Net Cash Flow

(816)

9,354

6,504

(6,102)

(4,750)

23,180

24,453

1,420

Opening net debt/(cash)

 

 

90,607

91,423

84,556

70,203

75,881

82,678

59,498

35,045

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

59,498

35,045

33,625

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

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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.

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60325 Frankfurt

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London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

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1185 Avenue of the Americas

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United States of America

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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

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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