GOLD_COMPANIES:AS_THE_SPOT_GOLD_PRICE_DIVES_HOW_CAN_THE_GOLD_COMPANIES_RESPOND_-2013-04-17.pdf
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1、Deutsche Bank Markets Research Australasia Australia M excl waste and inventory adjustment), (ii) royalties, (iii) sustaining capital costs (including mine development and cutbacks to maintain current production), (iv) near-mine exploration and evaluation and (v) corporate costs. We believe this is
2、the best definition of costs incurred to maintain a producing gold operation. Figure 1 presents our forecasts for all-in cash costs for covered stocks in FY13 (CY13 for AQG). This analysis has been done without adjusting models for a possible response to the lower gold price environment. Using our a
3、ll-in cash cost definition, we have determined MML has the lowest all-in cash costs. RRL is very competitive, driven mainly by low exploration, sustaining capex and corporate costs. EVN has the highest all-in cash costs for FY13 due to the higher sustaining capital expenditure (under our definition)
4、 however we expect EVN to be a large improver year on year, reducing to $1,294/oz in FY14. Figure 1: DBe FY13 All-in cash costs by company $590 $776 $1,237 $1,280 $1,351 $1,397 $1,567 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 Medusa Mining Regis Resources Newcrest Mining Alacer Gold
5、(CY) Silverlake Resources St. Barbara Mining Evolution Mining C1 Cash CostRoyaltyExplorationSust. CapexCorp. Overheads A$/oz Current spot gold price US$1,350/oz (A$1,310/oz) Source: Company reports, Deutsche Bank 16 April 2013 M but given only 8 of 23 operations are profitable at current levels (on
6、our estimates), cash flow may be a concern going forward. We believe companies will need to review cash flow maximization strategies. Figure 5: Last reported cash and debt positions (December, 2012) Company Company Cash Cash Debt Debt Net Debt Net Debt Comments Comments AQG US$277m US$69m (US$208m)
7、Self funded under the current expansion plan and receives $141m for Frogs Leg (and an additional $25m for toll treating). EVN $49m $84m $35m Company has a $200m debt facility in place which is currently only drawn to $84m. Since the company reported its cash position for December 31st we estimate $3
8、3m was spent at Mt Carlton. We currently assume another $40m is drawn to fund capex however this could be larger if gold prices remain lower. MML US$9m 0 (US$9m) Company has $38m in receivables which should start to come through this quarter. During this half, we have the company paying $34m in PPE
9、(sustaining and growth) and $12m for exploration, but we still expect an increasing cash position given the strong margins. The company has no debt so as a worst-case scenario, we would assume this would be the path taken if cash flow was reduced. NCM $97m $3,203m $3,106m Company had gearing of 17%
10、at the end of December. There is US$1.4bn in bilateral debt facilities that can still be drawn. PIR $23m 0 ($23m) Company recently completed a placement for $53m at $1.34/sh which has increased the cash position. RRL $8m 0 ($8m) Company has strong FCF even at compressed gold prices with all-in cash
11、costs below $800/oz. It also has a $50m facility available if required. The company has some hedging in place that is now all in the money (94koz at $1,544/oz and 95koz at $1,416/oz). SBM $66m $217m $151m Company recently replaced a $150m revolving facility with US$250m as a senior secured note issu
12、e at 8.875%. SLR $21m $11m ($9m) Company has a $75m facility that can be drawn (our understanding is that $20m is for environmental bonds leaving $55m that can be drawn). Source: Company reports, Deutsche Bank 16 April 2013 M any cutbacks that have not commenced (e.g. cutback 4 at Mt Rawdon) may be
13、delayed. The current cutbacks underway would be expected to be finalised given they are nearly complete. 3) Cracow and Pajingo have all-in cash costs close to the current gold price but will likely continue operating unless gold falls further. The operations have had reserves estimated using a A$1,3
14、50/oz gold price, so the mine plan may need to be adjusted. The company may target higher grade sections given development is well advanced, which provides options for the company if low gold prices persist. MML 1) Given all-in cash costs on our forecasts are well below $600/oz, margins will continu
15、e to remain strong. We would therefore not expect the current gold correction to alter the mill expansion plans or mine plan. 2) Bananghilig is long dated with production only expected from FY16. On our current gold forecasts, our IRR for the project is above 20%, however this could be greatly reduc
16、ed if gold was to persist at the current levels. The project still has permitting risks and does not yet have a reserve, so it could be pushed out further with gold price uncertainty. NCM 1) In FY13, on our all in-cash cost analysis, Hidden Valley, Bonikro and Lihir Island are not currently making f
17、ree cash however Gosowong and Cadia Valley are well positioned within the lowest quartile. 2) In FY14, we expect all-in cash costs to reduce so only Hidden Valley continues to be loss making. The company may look at opportunities at Hidden Valley to further optimize in order to reduce cash costs. 3)
18、 Wafi-Golpu could be further pushed out. PIR 1) Well funded and project is long dated so we would not expect any changes to the current timeline of events. RRL 1) Given Moolart Well and Garden Well both have all-in cash costs well below $800/oz, we would not expect the company to change its strategy
19、 at all. 2) It is self funded to develop Rosemont (total capex of c.$80m for mine and plant). 3) Dividend of 20cps has been announced for FY13, this will likely be a stretch given some short term production issues and the pull back in gold price. The company does have hedging which is now in the mon
20、ey (94koz at $1,544/oz and 95koz at $1,416/oz). SBM 1) In FY13 we forecast Gwalia/King of the Hills all-in cash costs of $1,108/oz rising slightly to $1,177/oz in FY14. 2) In contrast we forecast Simberi and Gold Ridge to be an average c.$1,700/oz in FY13. We forecast $1,200/oz at Simberi and $1,406
21、/oz at Gold Ridge in FY14 so the company may look at ways to take more costs out of the business. If our forecast improvement does not eventuate in FY14, potentially more drastic actions may need to be taken to prevent a cash drain. SLR 1) On an all-in cash cost basis, on our forecasts, Mount Monger
22、 is currently break even at A$1,310/oz while Murchison is above the current gold price as it ramps up. 2) In FY14, we expect both operations will have all in cash costs below $1,310/oz however we would expect the company to continue to review different scenarios at Mount Monger as part of the optimi
23、zation strategy. This may involve selectively mining higher grade from the current operations. If a higher-grade, lower-tonnage strategy is selected, the ongoing operation of the Lakewood mill may be reviewed. Source: Company data, Deutsche Bank 16 April 2013 M we have run scenarios at three differe
24、nt gold prices, using both DBe and the current AUDUSD exchange rate. ? EVN and SBM are the two companies most exposed to further gold price falls as a result of their higher cost operations. ? SLR, NCM, EVN and SBM remain heavily exposed to a strong Australian dollar. ? Due to their international op
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