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Wednesday, July 13, 2016 Derek Macpherson

NMI’s Record Q2 may lead to Increased Guidance


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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 this month.


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.

Company Description: 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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