Five Gold Stocks To Look At – RMS, DCN, CY5, WAF, RSG

Australia is comprised of a well-established gold ore mining industry with revenues boosting on the back of global economic conditions and higher domestic gold prices. The industry has witnessed rapid growth over the past decade, with gold being considered as ‘The Safe Asset’ at the time of national and global economic uncertainty.

However, as per the few media reports, Australia is expected to see a slip from its position as the second largest producer of gold to fourth in the coming years. The country is expected to see a fall in the production majorly due to ageing mines.

Ramelius Resources Limited (ASX: RMS)

Ramelius Resources Limited (ASX: RMS) is engaged in the exploration, mine development, production and sale of gold. The company recently updated the market about a change in the shareholding of Van Eck Associates Corporation and its associates. The voting power of the shareholder has reduced from 6.54% to 5.53%.

Production Update: In the production update for June quarter, the company reported total gold production of 47,342 ounces, which falls within the guidance range of 45,000 to 50,000 ounces of gold. Production for the entire year stood at 196,679 ounces of gold against the guidance range of 190,000 to 210,000 ounces. At the end of the quarter, the company had cash and gold balance of $106.8 million. The production was further divided into 18,913 ounces pertaining to Mt Magnet, 11,757 ounces pertaining to Vivien and 16,672 ounces to Edna May.

Production Guidance: The company expects FY2020 gold production to be between 205,000 to 225,000 ounces.

During the June quarter, the company incurred an expenditure of $23.3 million in acquisitions and capital development. This comprised of the acquisition of Explaurum Ltd for a consideration of $0.5 million. The total project development costs for the period amounted to $22.8 million.

LOM Plan: The company outlined a comprehensive five-year Life of Mine (LOM) plan to provide clarity around production and costs moving forward. As per the plan, the company anticipated gold production to exceed 1 million ounces mark over the five-year period. The plan will be underpinned by growth in resources and reserves. The company has planned to initiate the development of Marda Project in FY20, followed by Tampia Hill Project in FY21.

Production and Cost Forecast (Source: Company Presentation)

Outlook: The significant capital investments made during the year puts the company in an excellent position to meet the production and cost targets outlined in the Life of Mine plan.

Stock Performance: The stock of the company has generated a YTD return of 60.20% and at market close on 16th July 2019, traded at a price of $0.735, down 1.342%, with a market cap of $516.43 million.

Dacian Gold Limited (ASX: DCN)

Dacian Gold Limited (ASX: DCN) is engaged in the mineral exploration and development of its 100% owned Mt Morgans Gold Operation.

The company recently released the preliminary operating results for the June quarter. Gold production for the quarter stood at 36,658 ounces, meeting the updated production guidance of 36,000 to 38,000 ounces. All-in-Sustaining Cost for the quarter was reported at $1,519/oz, which was close to the lower end of AISC guidance of $1,500 to A$1,600/oz.

Updated Life of Mine Plan: The company also issued the updated Life of Mine plan and FY2020 guidance for Mt Morgans Gold Operation. As per the updated eight-year LOM plan, the company expects average annual production of 170,000 ounces over the first five years, i.e. from FY2020 to FY2024. The AISC for the five-year period is expected to be in the range of $1,340 to $1,440/oz. Total production during the eight-year period has been planned at 1.1 million ounces at an AIC of $1,280 to $1,380. Over the period, consolidated AIC is anticipated to be between $1,330 to $1,430/oz.

MMGO Mineral Resources (Source: Company Reports)

FY2020 Guidance: The company has provided FY20 production guidance in the range of 150,000 to 170,000 ounces at an MMGO All-in-Cost of $1,400 to $1,500/oz. Consolidated AIC for the period, including all capital, corporate and exploration expenditure, is expected to be between $1,450 and $1,550/oz.

At a gold price of $1,800, discounted at a rate of 5% pre-tax, cash flows from MMGO exceed $420 million based on the updated LOM plan.

Stock Performance: The stock of the company generated a positive return of 35.96% over a period of one month and at market close on 16th July 2019, the stock traded at a price of $0.635, up 0.794%, with a market cap of $136.56 million.

Cygnus Gold Limited (ASX: CY5)

Cygnus Gold Limited (ASX: CY5) is engaged in the exploration and discovery of gold and base metals deposits in the southwest portion of Yilgarn in Western Australia.

The company recently updated that it has restarted drilling activities on the Lake Grace JV with Gold Road Resources Ltd. The company expects the drilling program to continue for up to three weeks with the final results expected in August.

Quarterly Activities: During the quarter ended 31st March 2019, under the Stanley Project, the company’s exploration activities included RC drilling at the McDougall South prospect. Results from the drilling programs regarding testing of gold targets across the prospective Stanley greenstone were received. 231 soil samples were collected at the Bencubbin North nickel project with results from the soil program expected in the second quarter of 2019.

As at 31st March 2019, the company held $2.3 million in cash as compared to $3.5 million as at December 2018.

Key Highlights of 2018: During the year, the company incurred a loss after income tax amounting to $638,119 as compared to the loss of $784,721 in 2017.

Income Statement (Source: Company Reports)

Stock Performance: The stock of the company has generated a YTD return of 20% and at market close on 16th July 2019, traded at a price of $0.097, up 7.778%, with a market cap of $4.73 million.

West African Resources Limited (ASX: WAF)

West African Resources Limited (ASX: WAF) is primarily engaged in the development of Sanbrado Gold Project and mineral exploration in Burkina Faso.

The company recently reported assay results from the maiden grade control reverse circulation drilling program. The drilling program pertains to the M1 South deposit at the Sanbrado Gold Project. Initial drill holes from the program returned high-grade results, including 27m at 8.7 g/t Au. The management stated that the company is on track to achieve commercial gold production in the second half of 2020, with construction activity progressing on time and budget.

Key Highlights of March Quarter: During the quarter, the company incurred project expenditures amounting to $25.9 million and administration costs for the period stood at $1.5 million. As at 31st March 2019, the company had cash at bank amounting to $37.2 million.

The company completed the Sanbrado Optimised Feasibility Study, which envisages a 10-year mine life. Average production over the Life of Mine is expected to be 153,000oz/year. It has the highest margin gold project in construction with a targeted production of over 300,000 ounces of gold in the first 12 months. The average annual production over the first five years is expected to be 217,000 ounces at an All-in-Sustaining Cost of less than US$600/oz. The average cash costs for the first five year period is expected to be US$523/oz and the average AISC is expected to be US$563/oz. Over the Life of Mine, average cash costs are expected to be US$582/oz and average AISC of US$633/oz.

Highlights of Sanbrado Optimised Feasibility Study (Source: Company Presentation)

Stock Performance: Over a period of six months, the stock has generated a return of 53.19%, with a market capitalisation of $312.98 million. The stock at market close on 16th July 2019 traded at a price of $0.350, up 1.449%.

Resolute Mining Limited (ASX: RSG)

Resolute Mining Limited (ASX: RSG) is primarily engaged in the gold mining and exploration of minerals. The company recently updated that the Syama Underground Mine witnessed a commercial ore production rate exceeding 80% of the nameplate mine capacity. The mine is expected to produce approximately 2.4 million tonnes of ore per year.

In the June quarter, the company has seen substantial progress in the development rates, drill and blast performance and sublevel cave drawpoint availability. Based on the company’s current performance, ore hauled to the run-of-mine pad for the June quarter is expected to be approximately 320,000 tonnes, which is double the hauled tonnes achieved in the previous quarter.

March Quarter Updates: During the quarter, the company recorded gold production of 98,105 ounces at an AISC of $1,039/ounce. Gold production went up by 33% and AISC declined by 24%. Syama site production for the period stood at 84,552 ounces, up 50% on the prior quarter. During the quarter, the company signed a new Mali Mining Convention, which led to improved fiscal and operating conditions for Syama. As at 31st March 2019, cash, bullion and listed investments amounted to $86 million. As per the update provided for the December quarter, the company has also implemented the forward sale of 30,000 ounces of gold between July 2019 and December 2019.

March Quarter Production & Cost (Source: Company Reports)

FY19 Guidance: The company has provided FY19 gold production guidance of 300,000 ounces at an All-in-Sustaining Cost of $1,280/oz.

Stock Performance: Over a period of six months, the stock has generated a return of 30.43%, with a market capitalisation of $1.14 billion. The stock at market close on 16th July 2019 traded at a price of $1.540, up 1.316%.


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