Newmarket Gold Inc (TSX:NMI) released record Q2 2016 production results yesterday after the close. Continued production growth was driven by another
quarter of increased grade at Fosterville, as the company continues to mine higher grade material in the Lower Phoenix zone. Also, it is worth noting
that H1 production of 119,248 ounces represents ~54% of the top-end of 2016 guidance, suggesting a guidance increase may be on the horizon. We expect
Newmarket’s continued execution to help close the current valuation gap to peers, particularly if guidance is increased with Q2 financial results later
Q2 results could help close the valuation gap to peers, increased guidance would drive a re-rating. Newmarket is currently trading
at 4.5x 2017E EBITDA and 1.45x NAV, versus peers at 6.8x and 1.72x, respectively. In our view, steadily increasing production should allow Newmarket
to close the valuation gap to peers. As well, should Newmarket increase guidance when financial results are released on July 29th, a short-term positive
re-rating is likely.
Newmarket Gold Inc. (TSX:NMI) is a Canadian-listed gold mining and exploration company with three 100% owned operating
mines across Australia. The Company is focused on maintaining a strong foundation of quality gold production, over 200,000 ounces annually, generating
free cash flow and maintaining a large resource base as it executes a clearly defined gold asset consolidation strategy.
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