RCKS talk

Tuesday, August 01, 2017 Derek Macpherson

New Plant Delays Impact ALGD’s Q2; Ops Expected to Improve in Q3


Download Report

Austral Gold Ltd. (TSXV:AGLD, ASX:AGD) reported Q2 2017 production and financial results from its operations in Chile and Argentina. Total production for the quarter was 11,764 Au oz and 390,234 Ag oz (16,898 AuEq), the decrease in overall production QoQ was due to delays in the commissioning of the new agitation leach plant (Figure 1). The plant is expected to come online next quarter, which should result in higher production for the remainder of the year. Overall, it appears the company has the potential to meet its guidance of 115k AuEq oz for CY2017; however, the processing of higher grade ore from Amancaya is key. In our view, Austral is poised to re-rate towards similar scale peers, as it demonstrates its increased production potential.



Amancaya ore stockpiled for next quarter. During the quarter, open-pit operations commenced and pre-stripping was completed. The commissioning of the new agitation leach plant was delayed and therefore the higher-grade ore from Amancaya could not be processed. In the meantime, ore is being stockpiled to be processed this quarter when the new plant is expected to come online. In May, the company began exploration activities at Amancaya which include geophysics, mapping and trenching. Production from Amancaya is a key aspect of the company’s growth plans.

Guanaco production hindered by plant delays. Guanaco produced 7,404 Au oz and 15,651 Ag oz (7,610 AuEq vs. 10,466 AuEq in Q1 2017) during the quarter, a decrease in gold production by ~11% YoY, ~28% QoQ and an increase in silver production by ~18% YoY, ~23% QoQ. The lower production was due to delays with commissioning the new plant, the Merrill Crowe process could not be used and the old plant was used instead. The company anticipates the issues to be fixed this quarter. An exploration drill program is being planned for September/October 2017. The PFS for the combined operations of Amancaya and Guanaco was completed, we expect production to exceed what has been outlined in the report and for it to be between 60-75k oz AuEq per year.

Casposo guidance maintained; suggests meaningful operating improvements expected in H2. During the quarter 4,360 Au oz and 374,583 Ag oz (100% basis) - 3,052 Au oz and 262,208 Ag oz (70% basis) – was produced from Casposo. During the last quarter, Austral increased its interest in Casposo and still has the option to earn the remaining 30%. The company expects to produce 50,000 AuEq oz for the year (100% basis); however, meaningful operating improvements are likely required in H2 2017 since only ~16,568 AuEq oz in H1 2017.


Derek Macpherson | VP Mining Analysis
Victoria Ellis Hayes | Associate
 
Red Cloud Klondike Strike Inc.
105 King Street East, 2nd Floor
Toronto ON, M5C 1G6
RCKSTalk@RedCloudKS.com

Priced as of prior trading day's market close, EST (unless otherwise noted).
All values in USD unless otherwise noted

Disclaimer
Red Cloud Klondike Strike Inc. is registered as an Exempt Market Dealer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, and the Yukon. Part of Red Cloud Klondike Strike Inc.'s business is to connect mining companies with suitable investors that qualify under available regulatory exemptions (the "Red Cloud KS Business"). Red Cloud Klondike Strike Inc., its affiliates and associates, and their respective officers, directors, representatives, researchers and members of their families (collectively, "Red Cloud KS") may hold positions in the companies mentioned in this publication and may buy or sell, or buy and sell their securities or securities of the same class on the market or otherwise. Additionally, Red Cloud KS may have provided in the past, and may provide in the future, certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services.
Red Cloud KS has prepared this publication for general information purposes only, NOT as part of the Red Cloud KS Business. This document should not be considered a solicitation to purchase or sell securities or a recommendation to buy or sell securities. The information provided by Red Cloud KS for the purposes of this publication has been derived from sources believed to be accurate, but cannot be guaranteed. Opinions or analysis contained in this publication may be subject to change and Red Cloud KS does not undertake to advise the reader of such changes. This publication does NOT take into account the particular investment objectives, financial situations, or needs of individual recipients and other issues (e.g. prohibitions to investments due to law, jurisdiction issues, etc.) which may exist for certain persons. Recipients should rely on their own investigations and take their own professional advice before investment. Red Cloud KS will not treat recipients of this publication as customers or clients by virtue of having viewed this report.

Company Specific Disclosure Details
Austral Gold Ltd. - TSXV:AGLD, ASX:AGD - 1,2,7

1) A member of Red Cloud KS team has visited/viewed material operations of the issuer.
2) In the last 12 months, Red Cloud KS has been retained under a service or advisory agreement by the subject issuer.
3) In the last 12 months, Red Cloud KS has received compensation for investment banking services.
4) Red Cloud KS or a member of the Red Cloud KS team or household, has a long position in the shares and/or the options of the subject issuer.
5) Red Cloud KS or a member of the Red Cloud KS team or household, has a short position in the shares and/or the options of the subject issuer.
6) Red Cloud KS or a member of the Red Cloud KS team own more than 1% of any class of common equity of the subject issuer.
7) A member of Red Cloud KS team or a member’s household serves as a Director or Officer or Advisory Board Member of the subject issuer.




 

SUBSCRIBE TO HEAR FROM US

Gain access to exclusive mining industry research reports as well as additional mining industry information, promotional materials, press releases and news.

RCKS Talk Daily Analysis
RCKS News
LATEST POST
CATEGORIES
RELATED TAGS
ARCHIVES

 

RISK WARNING:

Red Cloud Klondike Strike Inc. is registered as an Exempt Market Dealer (EMD) in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, and Yukon.

 

By accessing this website you agree to be bound by our Terms of Use and Privacy Policy.

 

Red Cloud Klondike Strike Inc. connects mining companies with suitable investors that qualify under available regulatory exemptions. For example, in Canada, according to National Instrument 45-106, Prospectus and Registration Exemptions. Similar laws and regulations apply in other jurisdictions. Companies presented on this website are considered to be highly speculative and, as such, are suitable only for purchasers who can tolerate the highest level of risk including the loss of their entire investment.

© Copyright 2017 Red Cloud Klondike Strike Inc. All rights reserved.