Polymetal International Plc

Polymetal International Plc (LON: POLY) is a Cyprus-based leading gold and silver producer with a high-quality, low-cost asset base, and operations in Kazakhstan and Russia.

Solid Production Update (First Quarter Financial Year 2020)
On 20^th April 2020, Polymetal International released an update on the production for the Q1 FY2020. The group has shown solid production results despite global uncertainty and disruptions due to Covid-19 outbreak. The group is focussed on ensuring the health and safety of its employees, contractors, suppliers, and other counterparties. The group has an improved LTIFR (Lost Time Injury Frequency Rate) of 71 per cent for the period and recorded two minor injuries. The group’s production of gold equivalent surged by 5 per cent to 391 Koz in Q1 FY2020, driven by improved performance from Varvara, Svetloye and Kyzyl.

The group witnessed a decline in the planned grade from Voro and Omolon. Driven by high gold prices, the revenue surged by 9 per cent to USD 494 million in Q1 FY2020, while the sales volumes declined by 7 per cent, due to concentrate shipments slowdown to China due to coronavirus. The group has a net debt of USD 1.66 billion due to low sales volumes and seasonal advance purchases of consumables and diesel fuel. The group’s construction and development activities progressed as scheduled at POX-2 and Nezhda projects. The group expect it’s gold equivalent production guidance to be 1.6 Moz as the group witnessed devaluation of Kazakh Tenge and Russian Rouble in starting of the year. POLY maintained its guidance for AISC of US$ 850-900/GE oz and for TCC of US$ 650-700/GE oz for full-year and will be revised along with H1 results. The group is committed to paying a dividend as per its dividend policy.

Share Price Performance

Daily Chart as of April 23^rd, 2020, before the market close (Source: Thomson Reuters)

Polymetal International Plc shares were trading at GBX 1,687.00 at the time of writing before the market close (at 1:25 PM GMT) on 23^rd April 2020 and up by 3.66% versus the previous day closing price. Stock's 52 weeks High is GBX 1,693.00 and Low is GBX 763.71.

Valuation Methodology
 

Key Risks
Market risk, Production risk, Construction and development risk, Tax risk, Exploration risk, Health and safety risk, Environmental risk, Legal risk, Political risk, Currency risk, Liquidity risk, and Interest rate risk.

Conclusion
The Group reiterates its existing production guidance of 1.6 Moz of GE for the year 2020. In both years, the production will be weighted towards the second half due to seasonality. In 2020, the TCC is anticipated between US$ 650/GE oz and 700/GE oz, while AISC will be in the range of US$ 850-900/GE oz. The risk to operations is also due to the complex relation Russia currently has with the United States and European Union. Due to the strengthening of the US Dollar, the company had to face a negative impact on its earnings. For 2020, the company maintains a positive outlook, both in terms of free cash flow and earnings. Moreover, the company is trading near a 52-week high, raising doubts at its upside potential at current prices.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current of GBX 1,694 (as on 23^rd April 2020, before the market close at 2:09 PM GMT), with support from few catalysts needs to be evaluated at a later stage.

Shanta Gold Ltd

Shanta Gold Limited (LON: SHG) is a mining company engaged in the business of exploration, development, and production of gold in Eastern Part of Africa.

Improved Production & Operational Update (Q1 FY2020)
On 20^th April 2020, Shanta Gold released an update on the production and operational performance for the Q1 FY2020. The gold production stood at 20,167 ounces in Q1 FY2020 versus 19,550 oz in Q4 FY2019. The adjusted EBITDA stood at USD 15 million for the period as against USD 8.6 million in Q4 FY2019. The company managed to reduce it’s all-in sustaining costs to USD 833/oz, while cash operating costs stood at USD 630/oz in Q1 FY2020. In the first quarter of the financial year 2020, forward sales commitments declined to 31,265 oz versus 40,000 oz in Q4 FY2019. The group’s cash balance and liquidity stood at USD 15.7 million, with gross debt of USD 20.4 million for the period. The company announced the acquisition of Kenyan assets of Barrick Gold and transaction is expected to be complete in mid-2020. The group’s NI-43101 project based out of West Kenya is believed to be amongst highest grading deposits in the African region with over 1 Moz gold. The company expect its full-year guidance to be in between 80,000 - 85,000 oz at AISC of USD 830/oz to 880/oz reiterated for 2020.

Share Price Performance

Daily Chart as of April 23^rd, 2020, before the market close (Source: Thomson Reuters)

Shanta Gold Ltd shares were trading at GBX 11.12 at the time of writing before the market close (at 1:28 PM GMT) on 23^rd April 2020 and down by 1.16% versus the previous day closing price. Stock's 52 weeks High is GBX 13.30 and Low is GBX 6.00.

Growth Catalysts
The company’s revenue is steadily increasing, withnet production and costs are in line with the company’s guidance. The company is making efforts to grow and could be an opportunity for investors to invest.

Conclusion
The company has shown an increase in the operational performance in the Q1 FY2020 with adjusted EBITDA of USD 15 million and gold production increased to 20,167 ounces. The group managed to reduce all-in sustaining costs and cash operating costs for the period. The cash balance and liquidity stood for Q1 FY2020 stood at USD 15.7 million, with gross debt of USD 20.4 million for the period. The company announced the acquisition of Kenyan assets of Barrick Gold and transaction is expected to be complete in mid-2020. The group’s NI-43101 project based out of West Kenya is believed to be amongst highest grading deposits in the African region. The company is facing certain risks such as volatility in commodity price, interest rate risks, credit risks, liquidity risks and currency risks which could affect the overall business operations of the company.

Based on the above rationale, we have given a "HOLD" recommendation at the current price of GBX 11.08 (as on 23^rd April 2020, before the market close at 12:20 PM GMT).

Serabi Gold Plc

Serabi Gold Plc (LON: SRB) is a mining company based out of London, which is engaged in the activities for production and exploration of gold in the Brazilian region.

Production Update – Highest Monthly Production in March (Q1 Financial Year 2020)
On 14^th April 2020, Serabi Gold released an update on the production of gold in the Q1 financial year 2020. In the month of March 2020, the gold production stood at 3,674 ounces with the highest monthly production since the opening of operations. The gold production in the Q1 FY2020 stood at 9,020 ounces. The company mined 42,036 tonnes of ore at 6.54 g/t (grams per tonne) of gold for the period. The group processed 40,465 tonnes of ROM (run of mine) ore with 6.66 g/t of the average grade of gold. The company completed horizontal development of 2,878 metres in the Q1 FY2020. The company received positive feedback on Coringa projects’ public hearing and is awaiting for submission of recommendation for Licencia Previa award to COEMA (State Environmental Council).

Share Price Performance

Daily Chart as of April 23^rd, 2020, before the market close (Source: Thomson Reuters)

Serabi Gold Plc shares were trading at GBX 77.40 at the time of writing before the market close (at 1:33 PM GMT) on 23^rd April 2020 and up by 6.76% versus the previous day closing price. Stock's 52 weeks High is GBX 97.00 and Low is GBX 24.00.

Growth Catalysts
The company has many value-accretive projects in the pipeline with low risk and higher production. The company has a strong platform for EBITDA growth. 

Conclusion
The group showed decent production level in the first quarter of the financial year 2020, and in March the production touches the highest level since the opening of operations. The company received positive feedback on Coringa projects’ public hearing and is awaiting for submission of recommendation for Licencia Previa award. The company completed horizontal development of 2,878 metres in the Q1 FY2020. The operations are impacted by the outbreak of Covid-19, and the group is taking required measures to maintain production level close to the estimates. The company is facing certain risks such as volatility in commodity price, interest rate risks, credit risks, liquidity risks and currency risks which could affect the overall business operations of the company.

Based on prospects, we have given a "HOLD" recommendation at the current price of GBX 73.00 (as on 23^rd April 2020, before the market closed at 8:15 AM GMT).
 
*All forecasted figures and Peer information have been taken from Thomson Reuters.

Disclaimer

PLEASE BE ADVISED THAT YOUR CONTINUED USE OF THIS SITE OR THE INFORMATION PROVIDED HEREIN SHALL INDICATE YOUR CONSENT AND AGREEMENT TO THESE TERMS.
References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.
This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332.
The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine is not responsible for material posted on this website and does not guarantee the content, accuracy, or use of the content in this site. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated.
Kalkine do not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional licensed financial planner and adviser.