The Share Price Of BDR Zoomed By 3.774% After Its Tucano Update And 2018 Review

  • Jan 09, 2019 AEDT
  • Team Kalkine
The Share Price Of BDR Zoomed By 3.774% After Its Tucano Update And 2018 Review

Beadell Resources Limited (ASX: BDR), a company from the metals and the mining industries which is into the producing gold with mining activities at Tucano Gold Mine in Brazil announced the gold production of 15,848 ounces in December 2018 which is 27% higher than the November production reports. By adding this gold production volume, the total volume of gold produced for the entire 2018 was 123,336 ounces, exhibiting 1.3% downfall of the lower end of revised guidance in the range of 125,000-135,000 ounces. 

Initially, for FY18, the company had giving gold production guidance of between 145,000-155,000 ounces on account of two key assumptions i.e., (1) the completion of the Tucano Plant Upgrade in mid-2018, providing ore-type processing flexibility, and (2) the transition of the Brazilian mining contractor in the March quarter.

The CEO & Managing Director of Beadell, Dr. Nicole Adshead-Bell, highlights the challenging position of the company in 2018, where the company had to reduce the guidance in the range between 125,000-135,000 ounces in August due to delay in the Tucano Plant upgradation as a result of withdrawing control from the external contractor. As a result of the unplanned material movement, the company had to terminate the previous mining contractor. BDR hired a new Brazilian contractor to overhaul its mining operations post the operational challenges that it faced in 2018 and replace them with a new contractor.

In spite of these challenges, the Brazilian team of the company under the leadership of Mr. Luis Pablo Diaz who is the Country Manager was able to build a platform to optimize the mine for the first time in the history of Tucano’s operations. The plant got upgraded entirely in November 2018.

Dr. Nicole Adshead-Bell believes that the transition of the mining contract to the Brazilian contractor was the best decision as the Brazilian contractor holds the in-country experience and resources. The way they delivered the material movement with an optimal cost structure based purely on the performance, helped in reducing the mining cost by approximately US$100 million as per the operating cost profile.

The reduce guidance also weakened the balance sheet health of the company and also increased the risk in the first half of 2019 due to the interest cost and the scheduled repayment of debt. There was also a shortfall in revenue in between US$24-US$36 million. So, to deliver value to the shareholders, the company need to pull up their socks in the first half of 2019 for a better outcome this year.

BDR’s official listing date on ASX is 26 September 2007 where the performance of the company is consistently negative. In ten years, the performance of the company was -34.38%. The last one-year performance of the company was -70.56%. However, its performance is improving since last one month which is around 17.78%.

Based on the December production results, it appears that the investors and shareholders are satisfied with the introduction of the Brazilian contractor and they might believe that mine in under the right hand which will improve the performance of the mine in the near future. As a result, by the end of the trading on 9 January 2018, the market price of the share increased by 3.774%. The closing price of the share was A$0.05 with the market capitalization of A$88.7 million.


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