gold tracker 190619 · 2020. 2. 6. · page 2 resources 20 june 2019 the highlights reel of recent...

20 June 2019

Bells Gold Tracker

ASX-listed gold review

Analyst

David Coates 612 8224 2887 Analyst

Peter Arden 613 9235 1833 Authorisation

Stuart Howe 613 9235 1856

BELL POTTER SECURITIES LIMITED ABN 25 006 390 7721 AFSL 243480

DISCLAIMER: THIS REPORT MUST BE READ WITH THE DISCLAIMER ON PAGE 28 THAT FORMS PART OF IT.

The Bells Gold Tracker is a periodic review of ASX-listed gold equities and the gold market. We run through current market

themes, our current coverage, our quarterly production monitor, gold-producers’ and explorers’ comparison tables, a gold

equities performance “heat-map” and some key price and relative value charts. In this edition we have also included

summaries of key gold producers on our research coverage list. Our coverage is shown in Table 1 with recommendation

changes included with this update listed below.

Table 1 - Bell Potter precious metals coverage

SOURCE: BELL POTTER SECURITIES

We upgrade Regis Resources (RRL) to Buy, Target Price $5.40/sh (was Hold, TP$5.35/sh) on share price depreciation.

We upgrade Millennium Minerals (MOY) to Buy, Target Price $0.12/sh (was Hold, TP$0.12/sh) on share price depreciation.

We downgrade Dacian Gold (DCN) to Speculative Hold, Valuation $0.55/sh, (was Speculative Buy, TP$2.75/sh) on material

downgrades to guidance resulting in significant cuts to our earnings and valuation (see p8).

TALKING POINT

It’s a bit hard to go past the spate of recent blow-ups among the single-asset gold development stories. It’s been a slow and

painful burn for some and a spectacular fall from grace for others. Add another handful that are on a “red-flag” watchlist and it’s

easy to understand the market’s increased caution and associated de-rating of these companies’ peers. Anything carrying

extra technical risk, or a project with a Resource or Reserve that looks in any way marginal is being heavily discounted as the

market applies an increased risk premium or concludes that there is no margin for error should anything go wrong.

Figure 1 – Selected ASX gold equities heat map of rolling share price performance - on the road to glory

SOURCE: IRESS, BELL POTTER SECURITIES ESTIMATES

EGS was omitted from this table due to its multiple quarters of suspension from trading.

Prices at 19/06/2019 Market capitalisation Price Target price Recommendation Analyst

Regis Resources Ltd (RRL) $2,367m $4.66/sh $5.40/sh Buy (from Hold) DCGold Road Resources Ltd (GOR) $847m $0.97/sh $1.15/sh Hold (Spec) PADacian Gold Ltd (DCN) $122m $0.54/sh $0.55/sh Hold (Spec) from Buy (Spec) DCWestgold Resources Ltd (WGX) $636m $1.64/sh $1.95/sh Buy PAPantoro Limited (PNR) $178m $0.17/sh $0.35/sh Buy DCMillennium Minerals Ltd (MOY) $51m $0.06/sh $0.12/sh Buy (from Hold) DCBreaker Resources NL (BRB) $63m $0.31/sh $0.84/sh Buy (Spec) DCXanadu Mines (XAM) $34m $0.05/sh $0.55/sh Buy (Spec) PAS2 Resources (S2R) $24m $0.10/sh $0.32/sh Buy (Spec) PASilver Mines Ltd (SVL) $30m $0.04/sh $0.05/sh Hold (Spec) PA

3 months 3 months 3 months 3 months 3 months 12 months

Stock to Jun-2018 to Sep-2018 to Dec-2018 to Mar-2019 to Jun-2019 to Jun-2019

GCY -9% -46% -60% -9% -60% -92%

BLK -16% -39% -5% -33% -68% -88%

ARV -3% -3% -35% -50% -48% -84%

DCN -15% -13% -9% 17% -78% -80%

MOY -3% 18% -24% -2% -67% -71%

SBM 20% -25% 21% 4% -39% -43%

Resources 20 June 2019

The highlights reel of recent spectacular wipe-outs includes:

• Gascoyne (GCY): Negative Reserve and Resource reconciliations saw a mined grade of ~0.8g/t Au over the first 18

months of mining, vs the Reserve grade of 1.3g/t Au. This resulted in All-In-Sustaining Costs (AISC) blowing out to

>A$2,000/oz vs the targeted ~A$1,000/oz. GCY has now gone into administration;

• Dacian (DCN, Speculative Hold, Valuation $0.55): Everything went well for DCN until it came to mining the gold.

Declaring commercial production on 1 January 2019 and guiding FY19 production of 180-210koz, DCN subsequently

downgraded to 150-160koz in late March (including 50-55koz for the June quarter). However, in early June DCN cut this

to 138-140koz for FY19 and, more dramatically, gave preliminary FY20 guidance of 150-170koz at AISC of A$1,350/oz-

$1,450/oz and lowered longer term annual production to 160-180koz. This is ~15% lower than the targeted ~200kozpa

life-of-mine average at AISC of ~A$1,000/oz. While production and reliability issues contributed, the key driver appears to

be negative reconciliations of 15% for Reserve ounces to milled ounces. In other words, 15% of the ounces in the

Reserve don’t appear to be there, resulting in lower grades, lower production, higher costs and a big hit to valuation.

• St Barbara (SBM): Spectacularly fell from grace with the release of a long-awaited feasibility study into the long-term

haulage options at its Gwalia underground, which is heading to 2,300m below surface. Higher costs and technical risks of

alternative options led SBM to stick with truck haulage, implying lower production and higher costs than had been

anticipated by the market. Still, with a preliminary outlook for longer-term production of 220-230kozpa and higher (but still

profitable) costs, there was light at the end of the tunnel. Unfortunately, this was the oncoming train of an unpopular

acquisition (Atlantic Gold (AGB CN) for A$768m) and associated A$490m capital raising. The raise came undone when

SBM downgraded Gwalia’s FY19 production by 15koz to 220koz, leaving underwriters with A$127m in stock.

• Blackham (BLK): With a Stage 1 production objective of 100kozpa when it poured first gold in October 2016 and a longer

term Stage 2 objective of 175-230kozpa, BLK had a Resource base of 5.1Moz @ 3.3g/t Au and Reserves of 560koz @

2.5g/t Au. Of the Resource, 3.5Moz (69%) was refractory, so the plan was to run at 100kozpa from oxide material grading

2.0.g/t and then expand the plant to treat refractory ore and achieve the Stage 2 production target. The share price has

never recovered. A year later, BLK was undertaking its first re-financing, grades had struggled to get above 1.5g/t Au,

recoveries fell away as refractory ore was mined and production ran at 60kozpa. This lifted to 80kozpa in 1HCY18 and

AISC briefly dropped below A$1,500/oz in the March 2018 quarter but this was as good as it got. FY19 guidance was set

at 77-89koz at AISC of A$1,250/oz, but in the most recent quarterly was cut to 66-68koz @ AISC of A$1,700/oz.

• Eastern Goldfields (EGS): An under-capitalised development plan, low Resource to Reserve conversion, underground

mining without Reserves, milled grades of <1.5g/t Au vs Resource grades of ~3-4g/t and Reserve grade of 2.3g/t Au all

led to a catastrophic production and cost performance. Mill throughput got to half of 1.2Mtpa nameplate at best and while

AISC were never reported, we estimate the best quarter was +A$2,400/oz. EGS is currently being re-capitalised under a

new Board and management as Ora Banda Mining;

• Artemis (ARV): We’d almost forgotten about the watermelon seed nugget craze that saw ARV’s share price peak at

$0.55/sh (mkt cap A$300m) – that is until we ranked the stock performances on our Heat Map and noted ARV’s current

share price of $0.038/sh. The saving grace of this project is that the story waned before any real capital was invested.


But the A$ gold price is at all-time highs – I need to get some of the action!

The paradox of all this is that the A$ gold price is at an all-time high, having pushed through A$2,000/oz in the last 24 hours.

Furthermore, in our view, key drivers remain supportive of a positive price outlook:

• Global inflation expectations are low and real interest rates have dropped significantly, lowering gold’s holding cost;

• Safe haven trade has begun to re-emerge on the US-China trade war and recent geopolitical tensions; and

• The A$ is in a declining trend, having broken down below AUD:USD 0.70, and facing an easing interest rate cycle.

While there is some evidence of labour market tightness and input cost inflation in the Australian mining industry, the well-

managed producers are controlling costs, making excellent margins, have strong balance sheets, are delivering returns to

shareholders and have largely exercised capital discipline. A quick scan of the better-performing end of our Heat Map shows

some very handy capital returns (several have paid dividends on top of this) from some of the larger (multi-billion dollar) names

in the sector:

• Newcrest (NCM): up 43% in the 12 months to June;

• Saracen (SAR): up 62% in the 12 months to June; and

• Northern Star (NST): up 68% in the 12 months to June.

We believe attractive opportunities are currently available in the gold sector through which exposure to the very positive macro

environment can be gained. As always, there are no guarantees, but we have run through our coverage to weigh up our best

risk-reward propositions. We especially see this in the single-asset production companies, where the valuation of good assets

and management teams have suffered from the mistakes of their peers.

Top Pick – Pantoro Limited (PNR): Buy, TP$0.35/sh

As a single asset producer PNR will carry additional risk. This will be mitigated following the recent acquisition of the Central

Norseman Gold Project (CNGP), but we do not expect first production from here for ~12 months. In the meantime, we are

expecting production at PNR’s 100%-owned Nicolsons mine to successfully ramp-up to a run-rate of ~80kozpa from the end of

the June 2019 quarter and for AISC to drop to ~A$1,000/oz. We believe a strong, debt-free balance sheet, expanding margins

and management’s solid track record of delivery will separate PNR from the pack and earn a premium rating vs peers.

Regis Resources Limited (RRL): Buy, TP$5.40/sh

While RRL does not offer the current deep value proposition of PNR it does, in our view, offer attractive relative value

compared with its multi-mine producer peers and a relatively low risk profile. As one of the lowest cost pure gold producers it

offers less leverage to a rising gold price but strong cash flows will likely translate into high shareholder returns.


Regis Resources Limited (RRL)

Reliable production, low costs, sector leading returns

RRL has one of the best track records in the sector for delivering or beating production and

cost guidance. In both FY17 and FY18 production landed in the top half of the production

guidance range and AISC came in below the bottom end of the cost guidance range. For

FY19ytd this is again the case. When issues have arisen, as they last did in 2014 when the

Garden Well pit was flooded and reconciliation and metallurgical recovery issues emerged

in parts of that orebody, they were dealt with effectively. RRL drew down on A$50m debt,

re-cast its Reserves and re-optimised its pits. Within 12 months operations were well on

their way to recovery, cash was building on the balance sheet and debt repayments had

commenced. RRL is now one of the only producers in the sector to consistently report

AISC of A$1,000/oz or below and almost the only one to do so without the benefit of by-

product credits. This drives some of the highest AISC margins in the sector and

comfortably the highest dividend payout ratio in the sector – typically paying out 13-15% of

revenues as fully franked dividends. Capital discipline is also a feature. In late 2018 RRL

walked away from the planned acquisition of Capricorn Metals (CMM), when CMM’s 18.9%

shareholder would not support RRL’s offer of 11.4cps (in RRL shares). CMM continues to

trade at a discount to this level.

Investment thesis – Buy, Target Price $5.40/sh

Apart from the strong operational track record, low costs, strong balance sheet and sector

leading shareholder returns, one of the key attractions of RRL for us has been that it owns

its growth. Although the McPhillamys development project in NSW is unlikely to be

approved for another 18 months, it has potential to add 200kozpa it offers strong organic

growth. Meanwhile, RRL’s flagship operations at Duketon are showing excellent potential

for underground mines to add supplementary high grade feed to drive production growth.

With head grades coming off a low base (~1.0g/t Au) and 10Mtpa of installed milling

capacity, we see a recipe for very capital efficient production growth at Duketon. We have

made changes to our valuation, reflecting the March quarterly and our latest commodity

price and foreign exchange rate forecasts. We lift our Target price to $5.40/sh and our

recommendation from Hold to Buy.

Company description

RRL is a specialist low grade, open pit gold producer with all of its mines located in

Western Australia. The management team have a built track record of being very efficient

operators and for on-time, on-budget project delivery. The Duketon Gold Project (located in

the Laverton region 350km north, north-east of Kalgoorlie in WA) is RRL’s flagship project,

and comprises the Duketon North Operations (DNO) which comprise the Moolart Well and

Gloster deposits and the Duketon South Operations (DSO), which comprise the Garden

Well and Rosemont open pit mines and the Erlistoun deposit. These are all now in

production through a combined 10Mtpa of installed processing capacity across the

Duketon Project.

McPhillamys is a prospective, large, potential open pit project located in NSW, about 35km

from Orange and Bathurst and is currently undergoing further pre-development studies.

Both Duketon and McPhillamys originated from RRL’s strategic relationship with Newmont

(which involved the transfer from Newmont of its interest in the former project in return for a

20% interest in RRL, which Newmont has since sold).


Pantoro Limited (PNR)

Project delivery and value accretive acquisition

PNR is ramping up production at its Nicolsons Gold Mine from a ~50-55kozpa run-rate to

80kozpa, aiming to hit this level by the end of the current June quarter. It has to be

conceded that this is approximately 6 months behind the original schedule, as the initial

ramp-up was disrupted by poor ground conditions resulting in excessive dilution. While this

has necessitated a change in the mining method (now implemented), PNR has consistently

maintained head grades in-line with its Reserve grade of 7g/t Au and, if anything, enjoyed

positive reconciliations. Production risk is further mitigated by the addition of two new ore

sources – the Wagtail South open-pit and the Wagtail North underground. We also point

out that while a key element of PNR’s expansion is reliant on relatively new ore-sorting

technology, they have conducted extensive testing on all their ore types and completed

production runs that have delivered ore upgrades in-line with expectations. The coming

months will be the key test, but we believe good work has been done to mitigate the risks.

PNR also recently executed a binding agreement to acquire a 50% share of the Central

Norseman Gold Project (CNGP) and take immediate management control, with the aim of

returning the CNGP to production in the near term. From a valuation point of view, PNR

has effectively acquired its interest for A$39.09/oz, an approximate 38% discount to the

A$63/oz we currently measure in the market. The deal sets a strong foundation for growth

and creates the opportunity for PNR to execute a strategy as a high grade, multi-mine gold

producer which would position PNR as a unique offering on the ASX.

Investment thesis – Buy, Target Price $0.35/sh

Acquisition of 50% of the CNGP and management control of the asset lays out a clear

pathway to capital efficient growth for PNR. In the near-term we see replication of the re-

start model executed at Nicolsons, to establish near-term production of ~100kozpa. The

CNGP is also a significant scale tenement package with the potential for major discoveries,

which we think is one of the key opportunities for PNR over the longer term. PNR is one of

our top picks in the gold sector and we rate it a Buy with a Target Price of $0.35.

Company description

PNR is a growing gold production and development company. The 100% owned Halls

Creek Project (including the Nicolsons Gold Mine) is PNR’s flagship project. The project is

located in the Kimberley Region of Western Australia, approximately 45km SW of the town

of Halls Creek. First gold was poured at Nicolsons in September 2015 and PNR has now

established steady-state production at 50-55kozpa and All-In-Sustaining-Costs (AISC)

around A$1,100/oz. Implementation of an ore sorting program is expected to lift gold

production to a run-rate of >80kozpa from mid-CY2019 and result in lower costs. PNR has

also acquired a 50% share in, and management control of, the Central Norseman Gold

Project (CNGP), south of Kalgoorlie in WA. The project covers >1,000km2 of tenements,

the majority of which are granted Mining Leases. The CNGP has a large, high grade gold

Resource base totalling 4.4Moz grading 3.9g/t Au, including underground Resources of

2.1Moz grading 15.3g/t Au and surface Resources of 2.4Moz grading 2.3g/t Au. With past

production of >5.5Moz, well established infrastructure including an operating power plant,

sealed airstrip, past producing mill, plus road and rail access all neighbouring the

Norseman town, it provides an excellent platform for exploration and production growth.


Westgold Resources Ltd (WGX)

Higher underground grades boost dominant Murchison position

WGX has built up the dominant land and processing position in the Murchison district of

WA, where it has operated something like a dozen open pits and stockpiles over recent

years while focused on redeveloping multiple higher grade underground mines. Recently

the underground mines at the company’s three operations in the Murchison have begun to

demonstrate clearly that they are capable of delivering higher production to meet the

company’s production target of 270 - 300koz in FY20 and over 300kozpa beyond that as

the Big Bell mine ramps up to targeted rates on a long term basis. Divestment of the

company’s Higginsville Gold Operation through it being merged with the nearby

complementary assets of Royal Nickel Corporation (RNX) makes WGX the largest single

shareholder of RNX and gives it exposure to high grade gold production from RNX’s

exciting Beta Hunt operation, which will be processed at the Higginsville mill.

Investment Thesis – Buy, Target Price $1.95/sh

WGX’s gold production in 3Q FY19 showed that the improving performance expected over

the course of 2019 is underway as the company continues to bring on stream more of its

higher grade underground ore from its key Murchison mines with Big Bell on track to reach

full production by year end. As WGX continues to ramp up the performance of its

underground mines, average all in sustaining costs are forecast to decline to the range of

A$1,340 – A$1,410/ oz in FY20, generating growing free cash flow as mine development

declines to sustainable levels. Our target price of $1.95/share is based on our 12-month

forward NPV-based valuation. Our Buy recommendation is retained.

Company description

Demerged from Metals X Limited in December 2016, WGX is a significant and growing

gold producer with three 100% owned operations in the Murchison district of WA and an

advanced exploration project in Northern Territory. Current gold production is running at

an annual rate of around 270koz at an average AISC of around A$1,500/oz. WGX’s gold

production is expected to increase towards 350koz over the next few years at a lower

average AISC of around A$1,360/oz and possibly even lower. The company also has

significant exploration activities, mainly involving a near mine focus. The company’s gold

operations located to the north of Meekatharra comprise the Murchison Gold Operations

(MGO), the Cue Gold Operations (CGO) and the Fortnum Gold Operation (FGO). The

Murchison operations commenced production in late 2015 and while they are still

undergoing ramp-up, they have been transitioning from multiple open pit mines to higher

grade long life underground mines supplemented with minor open pit production. MGO’s

Bluebird mill has a processing capacity of 1.4 -1.6Mtpa; and CGO’s Tuckabiana mill has a

processing capacity of about 1.2 – 1.4Mtpa. At CGO, Big Bell is set to become WGX’s

flagship mine, having recently begun to deliver stope ore and it is planned to build to full

production rate by the end of 2019. FGO’s Fortnum mill has a processing capacity of 0.9 -

1.0Mtpa and continues to ramp up gold production as the Starlight underground mine now

becomes the dominant ore source. The Rover Project near Tenant Creek in the Northern

Territory contains a high grade gold-copper-bismuth Resource in the Rover 1 Prospect

(with similar mineralisation at the Explorer 142 Prospect) that is expected to be further

evaluated by exploration decline prior to a potential development and it also contains

significant zinc-lead-silver mineralisation nearby. The company also owns 100% of mining

contractor, ACM, which has been extensively re-capitalised and is now operating profitably.


Dacian Gold Ltd (DCN)

Textbook project development – but where’s the gold?

Everything went well for DCN until it came to mining the gold. Declaring commercial

production on 1 January 2019 and guiding FY19 production of 180-210koz, DCN

subsequently downgraded to 150-160koz in late March (including 50-55koz for the June

quarter). However, in early June DCN cut this to 138-140koz for FY19 and, more

dramatically, gave preliminary FY20 guidance of 150-170koz at AISC of A$1,350/oz-

$1,450/oz and lowered longer term annual production to 160-180koz. This is ~15% lower

than the targeted ~200kozpa life-of-mine average at AISC of ~A$1,000/oz. While

production and reliability issues contributed, the key driver appears to be negative

reconciliations of 15% for Reserve ounces to milled ounces. In other words, 15% of the

ounces in the Reserve don’t appear to be there, resulting in lower grades, lower

production, higher costs and a big hit to valuation.

Open-pit mined grades have averaged 0.9g/t Au to date from ~1.8Mt mined and compare

with the July 2018 Mineral Resource and Ore Reserve grades, both of 1.3g/t Au for the

Jupiter open-pit. Underground grade distribution is more variable, and less material has

been mined (~750kt to March 2019), but the grade of underground ore mined to date

stands at 3.6g/t Au and compares with a combined underground Reserve grade (for

Allanson and Beresford) of 4.1g/t Au. The milled head grade to date of 1.7g/t Au compares

with the blended Reserve grade of 2.2g/t Au for these deposits.

Investment thesis – Speculative Hold, Target Price $0.55/sh

While DCN has taken a big reputational hit and the impact of grades potentially being 15%

lower than plan is clearly material to cash flows and valuation, the show is not over yet. We

have re-cast our numbers on 15% lower grades, which drives lower production and higher

costs. On our current gold price forecasts we estimate, crucially, that DCN can meet the

debt service and repayment obligations on its A$123.5m debt balance. Risk around this is

mitigated by its hedge book and a remaining ~8yr mine life, which could conceivably

support a debt re-structure if necessary. We also point out that while our updated project

NPV is comfortably below MMGP’s CAPEX (a sunk cost), the project still generates

~A$35-40m per year of free cash flow on average over the life of mine. As such, there is a

case to be made for DCN being a corporate target, particularly if there is an opportunity to

re-optimise the mining operations on a revised Resource and Reserve base. We make a

Speculative Hold recommendation and value DCN at $0.55/sh.

Company description

DCN is a West Australian based company focused solely on the exploration and

development of its 100%-owned Mt Morgans Gold Project (MMGP) near Laverton in

Western Australia. The company acquired the project in early 2012, and since then has

increased the Mineral Resource base from 8.5Mt at 3.1g/t Au containing 0.84Moz gold to

54.7Mt at 2.0g/t Au containing 3.5Moz gold as at July 2018. On the basis of this Resource,

DCN has calculated a Reserve of 18.6Mt at 2.0g/t for 1.2Moz contained. Construction of

the MMGP commenced in late 2016 and production commenced in the June quarter of

2018. Originally guiding production and costs for FY19 at 180-210koz and AISC of

~A$1,000/oz, poor Reserve reconciliations have led to a material downgrade of

expectations. DCN most recently guided 138-140koz for FY19 and gave preliminary FY20

guidance of 150-170koz at AISC of A$1,350/oz-$1,450/oz.


The net impacts of these changes are summarised in the table below:

Table 2 - Changes to earnings estimates - DCN

Previous New Change

Year ending 30 June 2019e 2020e 2021e 2019e 2020e 2021e 2019e 2020e 2021e

Prices & currency

Gold (US$/oz) 1,348 1,397 1,397 1,274 1,400 1,420 -5% 0% 2%

Gold (A$/oz) 1,797 1,863 1,863 1,769 1,905 1,893 -2% 2% 2%

US$/A$ 0.75 0.75 0.75 0.72 0.74 0.75 -4% -2% 0%

Production & costs

Ore milled (Mtpa) 2.50 2.51 2.50 2.50 2.51 2.50 0% 0% 0%

Head grade (g/t Au) 3.1 2.7 2.6 1.90 2.14 2.08 -38% -20% -20%

Gold produced (kozpa) 224 196 189 140 159 153 -37% -19% -19%

All-In-Sustaining-Cost (A$/oz) 914 1,033 1,117 1,524 1,278 1,364 67% 24% 22%

Earnings

Revenue (A$m) 405 370 359 236 280 263 -42% -24% -27%

EBITDA (A$m) 212 179 159 30 91 65 -86% -49% -59%

EBIT (A$m) 159 133 114 (22) 32 8 -114% -76% -93%

NPAT (adjusted) (A$m) 108 90 78 (30) 27 3 -128% -70% -96%

EPS (reported) (cps) 54 45 39 (22) 20 3 -141% -56% -93%

PER (x) 1.0 1.2 1.4 (2.4) 2.7 21.1 (3.4) 1.5 19.7

EPS growth (%) 94% -17% -13% na na -87% na na -74%

DPS (reported) (cps) - - - - - - 0% 0% 0%

Yield 0% 0% 0% 0% 0% 0% 0% 0% 0%

NPV ($/sh) 2.73 - - 0.55 - - -80% na na

Price Target ($/sh) 2.75 0.55 -80%

SOURCE: COMPANY DATA AND BELL POTTER SECURITIES ESTIMATES


Gold Road Resources Ltd (GOR)

First gold at Gruyere still imminent and regional exploration

The Gruyere Gold Project is still imminent despite a setback from the ball mill issue that

means the full commissioning of the plant and ramp-up to full production is delayed, which

is disappointing but we regard it as quite minor in the overall scheme of things for such a

large Tier 1 gold project. We have slightly reduced our forecast for GOR’s gold production

in 2019 but we expect that although the average all in sustaining cost for 2019 is likely to

be higher than previous guidance, it is mainly a timing issue and could be lower than our

previous estimate. The company recently announced that Gruyere’s life of mine gold

production will be higher than previously forecast and will average around 300kozpa at a

very attractive low average life-of-mine all in sustaining cost of A$1,025/oz and the Gruyere

JV continues to explore opportunities to increase Gruyere’s output above 300kozpa by

possibly steepening the pit, lifting the status of the Inferred Resource in the A$1,850/oz pit

shell and by lifting the Golden Highway Resource and Reserve between existing pits.

GOR continues its active regional exploration program on its very large, 100% owned

Northern and Southern Project Areas with a focus on advanced prospects such as

Gilmour, where work is progressing towards defining a Maiden Resource while also

continuing to carry out early stage and follow-up exploration on multiple target areas.

Investment Thesis – Spec. Hold, Valuation $1.15/sh

With first gold production from Gruyere gold expected by the end of June 2019, the

company’s regional exploration at Yamarna is rightfully getting more attention as GOR is

progressing towards defining a Maiden Resource at Gilmour and progressing other

prospects and targets. While there is still more work to be done at Gilmour to define a

Resource, the company has learnt much about the nature of the regional gold

mineralisation from Gilmour that is directly assisting its work on other advanced regional

prospects. The 19% upside to our valuation of $1.15/share principally reflects the

significant worth of the Gruyere interest where first gold production is imminent at a time of

record A$ gold prices and emerging value is being unlocked by increasingly well informed

ongoing regional exploration. We retain our Speculative Hold rating.

Company description

GOR is a gold development and exploration company whose principal asset is the very

large Yamarna Gold Project (YGP), which covers over 6,000km2 of tenements on the

eastern edge of the Yilgarn Craton in Western Australia, where the company has been

exploring since 2006. GOR has a 50% joint venture interest in the Gruyere Gold Project

(GGP) with Gold Fields being the Manager and holding the other 50% interest. GOR is the

Exploration Manager for the GGP JV. The GGP has a total gold Resource base of 6.6Moz

at an average grade of 1.32g/t made up of 5.8Moz at 1.29g/t at Gruyere and 0.8Moz at

1.48g/t at Golden Highway, YAM 14 and Central Bore. Gruyere and the Golden Highway

have an Ore Reserve of 3.9Moz at an average grade of 1.25g/t. GOR holds a 100%

interest in and is the Manager of the North and South Yamarna regional exploration

projects where it is actively exploring multiple high priority gold camp-sized regional targets

and has been carrying out more detailed evaluation of advanced prospects such as

Gilmour-Morello, Smokebush, Wanderrie and Tamerlane as well as testing new targets as

part of one of the largest greenfields exploration programs in Australia. The company also

has a 6.2% interest in and an earn-in joint venture arrangement with junior gold explorer,

Cygnus Gold Ltd (CY5) relating to gold exploration projects in the south-west of WA.


Millennium Minerals Ltd (MOY)

On our “red flag” watchlist

MOY recently updated the market on the unexpected drawdown of an 18 month, secured

A$20m debt facility at a 13.5% interest rate from its major shareholder, IMC Group (47%).

Combined with a downgrade of its CY2019 production and cost guidance (to 80-90koz at

an AISC of $1,370-$1,450/oz, from previous guidance of 90-100koz at AISC of A$1,300–

$1,375/oz), MOY is on our “red flag” watchlist. While MOY managed a reasonable

December 2018 quarter and has a history of generating positive operational cash flows, it

also has a track-record of high costs and missing guidance. The most recent delays to the

sulphide circuit expansion at Nullagine and ramp-up of the Bartons underground are

examples of this. Total financing proceeds of $44m in the first 5 months of 2019 compared

with total CAPEX and exploration of ~$18m in the March quarter and an estimated $9m left

to spend on the sulphide expansion (of a total budget of $15m), is a worrying sign. And

while high cost producers are more leveraged to margin expansion in a rising gold price

environment, ~46% of MOY’s production to March 2020 is hedged at A$1,755/oz, limiting

this exposure. Together with technical risk associated with the planned sulphide

processing route and lower-than-forecast grades on a project that already has a high AISC

make MOY one to have very open eyes on.

Investment Thesis – Buy, Target Price $0.12/sh

Following the release of a poor March quarterly, we made the following observation: “MOY

clearly needs to lift operational cash flows and ensure capital spending remains within

budget. With the Investec facility now fully drawn and a rights issue just completed, any

additional financing requirement will send a very negative signal to the market.” MOY’s

unexpected debt drawdown for gross debt of $35m means that, in our view, MOY is

effectively working for the banks for the next 18 months. Combined with the latest

production and cost guidance we see little reason for equity holders to be in the stock until

there is strong evidence of successful delivery of the sulphide expansion and production

increase at Nullagine. We have made no changes to our earnings forecast or target price

of $0.12/sh, but we are compelled to lift our recommendation to Buy, from Hold, on recent

share price depreciation. With this in mind, we do point out that MOY has bought itself

some breathing space and, should it successfully implement its plans, the reward will be

significant from here – commensurate with the risk.

Company description

MOY is a gold exploration and production company whose primary asset is its 100%

owned Nullagine Gold Project, in the Pilbara region of Western Australia. Since

commencing production in 2012, ore feed to the mill has largely consisted of open-pit oxide

material, sourced from multiple deposits across the +40km strike length of MOY’s 280km2

tenement package. The bulk of this however remains largely under-explored due to drilling

having been focussed on shallow extensions to known deposits. This has been successful

in delineating sufficient free-milling oxide Reserves to underpin a 2 year mine life, but has

left much of the landholding effectively untested. Very little drilling outside the main

deposits extends deeper than 150m below surface. MOY is now showing there are

opportunities to expand and monetise the entire Resource base. It has recently confirmed

the technical viability of an expanded processing route to treat refractory sulphide

mineralisation which makes up the majority of its Resource base. These developments

could result in a significant increase to the Resource base, a much higher rate of

conversion to Reserves and a material extension to the life-of-mine (lom) at Nullagine.


BELL POTTER PRECIOUS METALS COVERAGE

Table 3 - Bell Potter precious metals coverage

SOURCE: BELL POTTER SECURITIES

RRL: RRL is one of our top picks among the ASX-listed gold producers due to its strong balance sheet, low costs, capital

efficient growth and high shareholder returns. Furthermore, we view RRL’s 100%-owned organic growth options as a strategic

advantage vs peers and the McPhillamys development project in NSW as undervalued by the market.

GOR: Gruyere is on track to produce its first gold imminently although the ball mill commissioning is delayed. The Gruyere JV

is working to lift average life-of-mine gold production above 300kozpa. Positive exploration results across GOR’s large

regional tenements confirm it is highly prospective with ongoing work at Gilmour closing in on a Maiden Resource.

DCN: Its A$200m, 2.5Mtpa Mount Morgans Gold Project commenced production in the June quarter of 2018 with commercial

production subsequently declared on January 1, 2019. Originally guiding production and costs for FY19 at 180-210koz and

AISC of ~A$1,000/oz, poor Reserve reconciliations have led to a material downgrade of expectations. DCN most recently

guided 138-140koz for FY19 and gave preliminary FY20 guidance of 150-170koz at AISC of A$1,350/oz-$1,450/oz.

WGX: Is continuing to ramp up output from its three Murchison operations with most ore coming from higher grade

underground mines. Sale of Higginsville operation to RNX makes WGX its largest single shareholder, giving WGX exposure to

RNX’s exciting Beta Hunt mine plus cash to bolster WGX’s financial position, now benefiting from growing free cash flow.

PNR: Offers attractive value as production increases, costs fall, the balance sheet strengthens and exploration success adds

to mine life at the Halls Creek Gold Project. In 2HCY19, the addition of a second underground mine and full utilisation of ore

sorting technology is expected to lift production to 80kozpa. The recent acquisition of a 50% interest in the Central Norseman

Gold Project (CNGP) adds a second high grade project that is well suited to PNR’s skill-set.

MOY: MOY’s primary asset is its 100%-owned Nullagine Gold Project, in the Pilbara region of WA. It has recently commenced

the addition of an expanded processing route to treat refractory sulphide mineralisation which opens up its tenements to

deeper gold exploration. However, technical risk and a poor operational performance have led to a de-rating of the stock.

BRB: Following the release of a maiden Resource of 624koz @ 1.6g/t Au in April 2018, BRB subsequently added 500koz in

the five months to September 2018 for an upgraded Resource of 1.08Moz @ 1.4g/t Au, including a high grade core of 808koz

@ 2.0g/t Au. We remain of the view that Lake Roe is the most compelling greenfields gold discovery in the market.

XAM: Scoping Study on only open pit mineralisation for three outcropping deposits at 76.5% owned flagship Kharmagtai

Copper–Gold Project in Mongolia confirms it economically attractive and capable of being a significant operation processing up

to 20Mtpa after low capex of US$484m. Shallow oxide gold being assessed as possible “starter” project to help funding.

S2R: Recent base of till drilling in Finland has identified a strong gold anomaly at the Aarnivalkea Prospect. Recent drilling at

the Ecru Prospect in Nevada, USA did not reach the target zone but the company has sent samples of the limestone for “bug”

dating to help understand stratigraphy. S2R plans follow-up drilling for nickel at its Taipan North Prospect near Norseman WA.

SVL: Recent approvals will enable expansion of the current drilling program at the Barabolar Project, which contains multiple

porphyry copper-gold and polymetallic targets, to incorporate drilling of the large Cringle anomaly. Results from the early part

of the drilling program are encouraging. SVL continues to advance the Environmental Impact Statement for Bowdens

Prices at 19/06/2019 Market capitalisation Price Target price Recommendation Analyst

Regis Resources Ltd (RRL) $2,367m $4.66/sh $5.40/sh Buy (from Hold) DCGold Road Resources Ltd (GOR) $847m $0.97/sh $1.15/sh Hold (Spec) PADacian Gold Ltd (DCN) $122m $0.54/sh $0.55/sh Hold (Spec) from Buy (Spec) DCWestgold Resources Ltd (WGX) $636m $1.64/sh $1.95/sh Buy PAPantoro Limited (PNR) $178m $0.17/sh $0.35/sh Buy DCMillennium Minerals Ltd (MOY) $51m $0.06/sh $0.12/sh Buy (from Hold) DCBreaker Resources NL (BRB) $63m $0.31/sh $0.84/sh Buy (Spec) DCXanadu Mines (XAM) $34m $0.05/sh $0.55/sh Buy (Spec) PAS2 Resources (S2R) $24m $0.10/sh $0.32/sh Buy (Spec) PASilver Mines Ltd (SVL) $30m $0.04/sh $0.05/sh Hold (Spec) PA


ASX QUARTERLY PRODUCTION MONITORS

The tables and charts below monitor the quarterly production and cost progress against guidance for the largest ASX gold

producers. The tables show actual production and costs vs the company’s guidance midpoint. Variance vs the midpoint is

highlighted in green or red according to whether the company is tracking ahead of or behind guidance respectively.

Figure 2 – Quarterly production and cost progress: Newcrest Mining (NCM)

SOURCE: COMPANY DATA, IRESS, BELL POTTER SECURITIES ESTIMATES

Figure 3 – Quarterly production and cost progress: Evolution Mining (EVN)


Figure 4 – Quarterly production and cost progress: Northern Star (NST)


Newcrest Mining (NCM) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production

Reported production (oz Au) 548,351 654,849 623,124 1,826,324

Guidance (midpoint, oz Au) 618,750 618,750 618,750 618,750 2,475,000

Cumulative progress (%) 22.2% 48.6% 73.8% - 73.8%

Costs

AISC (A$/oz) $1,064 $1,004 $1,036 $1,033

Guidance (midpoint, A$/oz) $1,065 $1,065 $1,065 $1,065 $1,065

Variance vs guidance (%) -0.2% -5.7% -2.8% - -3.1%

Production as % of guidance

0% 25% 50% 75% 100% 125%

Production as %

of guidance

Sep-18 Dec-18 Mar-19 Jun-19

$1,657

$1,715

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800


AISC (A$/oz) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)

Evolution Mining (EVN) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production

Reported production (oz Au) 200,218 181,996 175,901 558,115

Guidance (midpoint, oz Au) 186,250 186,250 186,250 186,250 745,000


Costs

AISC (A$/oz) $885 $973 $925 $926

Guidance (midpoint, A$/oz) $875 $875 $875 $875 $875

Variance vs guidance (%) 1.1% 11.2% 5.7% - 5.9%


0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657$1,715

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800



Northern Star (NST) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $1,226 $1,365 $1,369 $1,317


Variance vs guidance (%) -1.9% 9.2% 9.5% - 5.4%

Production guidance unchanged

Cost guidance increased $75/oz w Mar Qtly


6.4%

0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657$1,715

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800




Figure 5 – Quarterly production and cost progress: Regis Resources (RRL)


Figure 6 – Quarterly production and cost progress: OceanaGold (OGC)


Figure 7 – Quarterly production and cost progress: St Barbara Mines (SBM)


Regis Resources (RRL) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $923 $985 $1,019 $976




0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657$1,715

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800



OceanaGold (OGC) Mar-19 Jun-19 Sep-19 Dec-19 YTD

Production

Reported production (oz Au) 125,681 125,681


Cumulative progress (%) 23.9% - - - 23.9%

Costs

AISC (A$/oz, BPe*) $1,440 $1,440


Variance vs guidance (%) 21.8% - - - 21.8%


0% 25% 50% 75% 100% 125%

Production as %

of guidance

Mar-19 Jun-19 Sep-19 Dec-19

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800


AISC (A$/oz, BPe*) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)

St Barbara (SBM) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $919 $1,108 $1,098 $1,037


Variance vs guidance (%) -15.5% 1.9% 1.0% - -4.6%

Production guidance lowered 5koz w Mar Qtly

Cost guidance increased $15/oz w Mar Qtly


0% 25% 50% 75% 100% 125%

Production as

% of guidance


$1,657

$1,715$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800




Figure 8 – Quarterly production and cost progress: Resolute Mining (RSG)


Figure 9 – Quarterly production and cost progress: Saracen Mineral Holdings (SAR)


Figure 10 – Quarterly production and cost progress: Westgold Resources (WGX)


Resolute Mining (RSG) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $1,560 $1,360 $1,039 $1,270


Variance vs guidance (%) 21.9% 6.3% -18.8% - -0.8%


0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657

$1,715

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800



Saracen (SAR) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $993 $1,067 $1,035 $1,032



Production guidance increased by 20.0koz Jan-19

Cost guidance unchanged


0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657 $1,715

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800



Westgold (WGX) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $1,552 $1,501 $1,269 $1,435


Variance vs guidance (%) 17.1% 13.3% -4.2% - 8.3%

Production guidance lowered by 20.0koz Jan-19


0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657 $1,715

$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800




Figure 11 – Quarterly production and cost progress: Ramelius Resources (RMS)


Figure 12 – Quarterly production and cost progress: Millennium Minerals (MOY)


Figure 13 – Quarterly production and cost progress: Silver Lake Resource (SLR)


Ramelius (RMS) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $1,253 $1,190 $1,210 $1,218


Variance vs guidance (%) 4.4% -0.8% 0.8% - 1.5%

Production guidance decreased by 10.0koz w Dec Qtly

Cost guidance narrowed but unchanged


0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657

$1,715$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800



Millennium Minerals (MOY) Mar-19 Jun-19 Sep-19 Dec-19 YTD

Production

Reported production (oz Au) 17,393 17,393


Cumulative progress (%) 20.5% - - - 20.5%

Costs

AISC (A$/oz, BPe*) $1,576 $1,576


Variance vs guidance (%) 11.8% - - - 11.8%

Production guidance dropped 10koz and cost guidance raisedA$72.50/oz May-19


0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800


AISC (A$/oz, BPe*) Guidance (midpoint, A$/oz) Qtly avg gold price (A$/oz)

Silver Lake (SLR) Sep-18 Dec-18 Mar-19 Jun-19 YTD

Production




Costs

AISC (A$/oz) $1,469 $1,464 $1,444 $1,459


Variance vs guidance (%) 7.2% 6.9% 5.4% - 6.5%


0% 25% 50% 75% 100% 125%

Production as %

of guidance


$1,657

$1,715$1,829

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800




GOLD EQUITIES – PRODUCERS COMPS TABLE

Co

mp

an

y

AS

X

Co

de

Pri

ce

(A$/s

h)

Ma

rket

Ca

p

(A$

m)

Ne

t

Cash

/(D

eb

t)

(A$m

)E

V (

A$

m)

Cu

rren

t

pro

du

cti

on

rate

(k

ozp

a)

La

test

AIS

C

(A$

/oz)

AIS

C

ma

rgin

(A$/o

z)

Imp

lied

AIS

C

ma

rgin

(A

$m

pa)

EV

/AIS

C

marg

in

x

To

tal

hed

ge

d

(ko

z)

Av

g h

ed

ged

pri

ce (

A$

/oz)

Ma

rk-t

o-

mark

et

(A$m

)

Net

cas

h

(de

bt)

/

Mkt

Ca

p

New

cre

st M

inin

g L

imited

NC

M$

30

.54

$23

,46

9.2

-$1

,39

4.6

$24

,86

3.8

2,4

92

$1

,03

6$91

9$

2,2

90

.41

0.9

x8

71

.1

$1,8

36

-$10

3.6

-5.9

%

Evolu

tio

n M

inin

g L

imited

EV

N$4

.08

$6

,92

4.0

-$7

4.1

$6

,99

8.1

704

$92

5$1

,03

0$7

24

.69.7

x4

37

.5

$1,8

26

-$5

6.4

-1.1

%N

ort

he

rn S

tar

Resourc

es L

tdN

ST

$10

.70

$6

,84

3.6

$28

8.0

$6

,55

5.6

745

$1

,36

9$58

6$4

36

.515

x1

96

.4

$1,7

96

-$3

1.2

4.2

%

Sara

ce

n M

inera

l H

old

ing

s L

imite

dS

AR

$3

.59

$2

,94

5.3

$15

3.3

$2

,79

2.0

357

$1

,03

5$92

0$3

28

.38.5

x3

58

.5

$1,7

92

-$5

8.4

5.2

%O

cea

naG

old

Corp

ora

tion

OG

C$4

.32

$2

,67

1.5

-$14

4.3

$2

,81

5.7

503

$1

,44

0$51

5$2

58

.91

0.9

x1

26

.9

$1,8

10

$0.0

-5.4

%

Regis

Re

so

urc

es L

imite

dR

RL

$4

.66

$2

,36

6.7

$18

6.6

$2

,18

0.1

364

$1

,01

9$93

6$3

41

.06.4

x4

38

.3

$1,5

92

-$15

9.1

7.9

%S

t B

arb

ara

Lim

ited

SB

M$2

.67

$1

,85

7.4

$38

2.0

$1

,47

5.4

353

$1

,09

8$85

7$3

02

.94.9

x1

77

.0

$1,8

06

-$2

6.3

20

.6%

SLR

+ D

RM

pro

-form

a-

$0

.00

$1,1

21.5

$12

3.9

$99

7.6

225

$1

,34

6$6

09

$1

36

.77.3

x1

69

.9

$1,7

57

-$3

3.6

11

.0%

Silv

er

Lake R

esourc

es L

imited

SL

R$1

.06

$86

7.3

$10

8.5

$75

8.8

141

$1

,44

4$51

1$

71

.91

0.6

x1

27

.4

$1,7

58

-$2

5.1

12

.5%

Resolu

te M

inin

g L

imite

dR

SG

-$81

8.7

-$9

9.4

$91

8.1

392

$1

,03

9$91

6$3

59

.42.6

x1

56

.0

$1,8

28

-$1

9.7

-12

.1%

Westg

old

Re

so

urc

es L

imited

WG

X$1

.64

$63

6.2

$1

3.4

$62

2.8

269

$1

,26

9$68

6$1

84

.33.4

x1

50

.0

$1,7

94

-$2

4.1

2.1

%

Pers

eu

s M

inin

g L

imited

PR

U$0

.50

$58

3.7

$5

2.8

$53

0.9

269

$1

,19

4$76

1$2

04

.32.6

x78

.5

$

1,8

92

-$4.9

9.0

%

Ram

eliu

s R

eso

urc

es L

imited

RM

S$0

.66

$43

4.2

$10

4.7

$32

9.5

181

$1

,21

0$74

5$1

34

.92.4

x2

03

.3

$1,7

90

-$3

3.5

24

.1%

Aure

lia M

eta

ls L

imited

AM

I$0

.47

$41

0.1

$10

8.6

$30

1.5

93

$1

,30

2$65

3$

60

.94.9

x56

.0

$

1,7

54

-$1

1.3

26

.5%

Dora

y M

inera

ls L

imite

dD

RM

$0

.56

$25

4.2

$1

5.4

$23

8.8

84

$1

,18

2$77

3$

64

.83.7

x42

.5

$

1,7

54

-$8.5

6.1

%R

ed 5

Lim

ite

dR

ED

$0

.17

$21

1.3

$1

3.5

$19

7.8

97

$1

,63

7$31

8$

30

.86.4

x29

.7

$

1,7

91

-$4.9

6.4

%

Pan

toro

Lim

ited

(ex-C

NG

P)

PN

R$0

.17

$17

7.5

$2

3.2

$15

4.3

45

$1

,21

7$73

8$

33

.34.6

x24

.0

$

1,7

73

-$4.4

13

.1%

Dacia

n G

old

Lim

ited

DC

N$0

.55

$12

3.0

-$5

3.3

$17

6.3

140

$1

,48

8$46

7$

65

.42.7

x1

55

.1

$1,7

66

-$2

9.3

-43

.3%

Med

usa M

inin

g L

imited

MM

L$0

.50

$10

3.9

$2

8.6

$7

5.2

119

$1

,31

8$63

7$

76

.11

x-

na

na

27

.6%

Mill

en

niu

m M

ine

rals

Lim

ite

dM

OY

$0

.06

$5

0.8

$3.6

$4

7.2

70

$1

,57

6$37

9$

26

.41.8

x42

.9

$

1,7

55

-$8.6

7.1

%

Tro

y R

esou

rce

s L

imite

dT

RY

$0

.08

$4

9.7

$2.1

$4

7.6

53

$1

,73

9$21

6$

11

.54.1

x-

$0

$0.0

4.3

%B

lackha

m R

eso

urc

es L

imited

BL

K$0

.01

$2

7.9

-$1

8.7

$4

6.6

61

$1

,75

7$19

8$

12

.13.9

x33

.5

$

1,7

85

-$5.7

-66

.9%

Av

era

ge

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x

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D R

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DE

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to

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19

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zs

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Au

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z)

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se

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(A$

/oz)

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t

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eb

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q (

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an

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New

cre

st M

inin

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t B

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41

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n M

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ers

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RU

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he

rn S

tar

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es L

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sa

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ing L

imite

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n M

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l H

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old

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s M

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ilver

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ke

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Mill

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m M

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Resou

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ce

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Gold

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imited

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79

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2

SO

UR

CE

: IR

ES

S,

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MP

AN

Y R

EP

OR

TS

, B

ELL P

OT

TE

R E

ST

IMA

TE

SP

riced a

s a

t:19/0

6/2

019

AIS

C m

arg

in:

marg

in b

etw

een A

ISC

and A

$ s

pot

gold

price

Pro

duction is g

old

ounces o

nly

, by-

pro

duct cre

dits a

re a

ccounte

d f

or

in A

ISC

Implie

d A

ISC

marg

in =

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in x

annualis

ed p

roduction.

Is a

n e

stim

ate

only

NO

TE

:T

his

pure

lym

ea

sure

schanges

innet

cash

(debt)

qoq

net

of

equ

ityra

isin

gin

flow

sand

div

idend

paym

ent

outf

low

sove

rgold

ounces

pro

duced.

There

fore

,ove

rand

above

cash

ou

tflo

ws

measure

dby

the

AIS

C,

itw

illals

ocaptu

recapital

investm

ents

inn

ew

pro

jects

,debt

repaym

ents

/dra

wdow

ns,

asset

acquis

itio

ns

and

div

estm

ents

,gold

forw

ard

sale

s,

tim

ing

of

sale

s,

cash

tax

paym

ents

and

oth

er

one-o

ffitem

sim

pacting

qu

art

erly

cash

move

ments

ove

r

an

dabove

the

ongoin

gopera

tions.

Com

pan

ies

with

by-p

roducts

have

cash

changes

measure

d o

ver

gold

ounces o

nly

, exa

ggera

ting t

his

metr

ic.


GOLD EQUITIES – EXPLORERS COMPS TABLE

Co

mp

an

y

AS

X

Co

de

Pri

ce

(A$

/sh

)

Ma

rket

Ca

p

(A$m

)

Ne

t

Ca

sh

/(D

eb

t)

(A$m

)E

V (

A$

m)

Re

so

urc

es

(Mo

zs

)

Gra

de

(g/t

Au

)

EV

/ R

es

oz

(A$

/oz)

Re

serv

es

(Mo

zs

)

Gra

de

(g/t

Au

)

EV

/Rs

v o

z

(A$/o

z)

Net

cas

h

(de

bt)

/

Mkt

Ca

p

Go

ld R

oad

Re

so

urc

es L

imited

GO

R$

0.9

7$8

53.8

$4

9.0

$8

04.8

3.3

10

1.3

2$

243

2.0

1.2

5

$4

11

5.7

%

Belle

vu

e G

old

Lim

ited

BG

L$

0.6

6$3

29.3

$2

8.7

$3

00.6

1.5

30

11

.80

$1

96

-

-

n

a8

.7%

West A

fric

an R

esou

rce

s L

imite

dW

AF

$0

.29

$2

52.1

$3

7.2

$2

14.9

3.0

89

1.7

7$

70

1.7

2.4

0

$1

30

14

.8%

Cata

lyst

Me

tals

Lim

ited

CY

L$

2.0

1$1

58.6

$1

6.7

$1

41.9

0.0

00

0.0

0na

-

-

n

a10

.5%

Card

ina

l R

eso

urc

es L

imited

CD

V$

0.3

3$1

24.4

-$1

1.4

$1

35.8

6.9

90

1.1

3$

19

5.1

1.1

3

$

27

-9.1

%

Van

go M

inin

g L

imite

dV

AN

$0

.17

$9

8.7

-$1

0.2

$1

08.9

0.4

10

8.0

0$

266

-

-

n

a-1

0.3

%

Ech

o R

eso

urc

es L

imite

dE

AR

$0

.15

$1

00.2

$1

9.0

$8

1.2

1.6

73

1.9

0$

49

0.8

1.6

0

$

99

19

.0%

Cap

rico

rn M

eta

ls L

tdC

MM

$0

.09

$7

9.6

$1

2.0

$6

7.6

1.5

25

0.9

0$

44

0.9

1.0

0

$

76

15

.1%

Bard

oc G

old

Lim

ited

BD

C$

0.0

5$

63.8

$8

.6$

55.2

2.5

75

2.1

0$

21

-

-

n

a13

.5%

IRC

+M

RP

pro

-fo

rma

-$0

.00

$63

.8$

6.7

$57

.11

.17

41.5

5$

49

-

-

na

10

.4%

Bre

ake

r R

eso

urc

es N

LB

RB

$0

.31

$6

3.1

$9

.6$

53.5

1.0

84

1.4

0$

49

-

-

n

a15

.2%

Ta

nam

i G

old

NL

TA

M$

0.0

4$

48.2

$2

8.3

$1

9.9

1.6

46

2.8

0$

12

-

-

n

a58

.7%

Pro

dig

y G

old

NL

PR

X$

0.0

9$

43.3

$5

.2$

38.1

1.0

10

2.0

0$

38

-

-

n

a12

.0%

Inte

rmin

Re

so

urc

es L

imite

dIR

C$

0.1

0$

42.4

$5

.6$

36.8

0.6

67

2.0

0$

55

-

-

n

a13

.2%

De G

rey

Min

ing

Lim

ite

dD

EG

$0

.08

$3

5.5

$3

.2$

32.3

1.3

93

1.6

0$

23

-

-

n

a9

.0%

Calid

us R

esou

rce

s L

imited

CA

I$

0.0

3$

30.8

$3

.0$

27.8

1.2

50

1.8

3$6

-

-

n

a9

.7%

Ega

n S

tre

et R

esou

rce

s L

imite

dE

GA

$0

.23

$3

0.0

$4

.5$

25.5

0.4

54

9.2

0$

56

0.2

4.4

0

$1

28

15

.0%

Ge

ne

sis

Min

era

ls L

imited

GM

D$

0.0

2$

25.1

$4

.4$

20.7

0.7

60

3.3

0$

27

-

-

n

a17

.6%

Nusa

nta

ra R

eso

urc

es L

imite

dN

US

$0

.18

$2

4.9

$1

0.4

$1

4.5

2.0

00

1.3

8$7

1.1

1.3

2

$

13

41

.8%

Ma

cp

hers

on

s R

eso

urc

es L

imite

dM

RP

$0

.06

$2

1.4

$1

.1$

20.4

0.5

07

0.9

6$

40

-

-

n

a4

.9%

Mu

sg

rave

Min

era

ls L

imite

dM

GV

$0

.05

$2

0.1

$5

.1$

15.0

0.4

41

2.8

4$

34

-

-

n

a25

.4%

Art

em

is R

eso

urc

es L

imite

dA

RV

$0

.03

$2

0.5

-$3

.3$

23.8

0.2

60

1.0

6$

92

-

-

n

a-1

6.1

%D

uketo

n M

inin

g L

imite

dD

KM

$0

.12

$1

4.2

$3

.7$

10.5

0.0

96

1.5

5$

109

-

-

n

a26

.1%

Ausgo

ld L

imited

AU

C$

0.0

1$

10.5

$1

.5$

9.0

1.0

38

1.2

9$9

-

-

n

a14

.3%

Mid

dle

Isla

nd

Re

sou

rce

s L

imite

dM

DI

$0

.01

$5.2

$1

.4$

3.8

0.5

03

1.4

0$8

-

-

n

a26

.7%

To

tal /

av

era

ge

$2

,55

9.4

35

.385

2.2

$63

11.8

1.4

$1

26

SO

UR

CE

: IR

ES

S,

CO

MP

AN

Y R

EP

OR

TS

, B

ELL P

OT

TE

R E

ST

IMA

TE

SP

riced a

s a

t:19/0

6/2

019


GOLD EQUITIES – PERFORMANCE HEAT MAP

With reference to our front page chart, we think it is worth repeating the performance of the gold equites versus the broader

market over the last few years: The ASX Gold Index gained 11% in CY18, 21% in CY17, 54% in CY16 and 29% in CY15 (vs -

7%, +7%, +7% and -2% respectively for the ASX200,).

We had previously written that we expected share price performance to trickle down in to the smaller names and we were

seeing signs of this in the March 2019 quarter. However, with the failures and negative surprises that have emerged among

this group, the performance has fallen away as the market has balked and applied higher risk discounts. We are of the view

that the opportunity remains to make good returns from the mid-cap names on a selective basis, i.e. where there are good

management teams in place backed by solid balance sheets and assets that are delivering to expectations.

Figure 14 – ASX gold equities heat map of rolling share price performance

SOURCE: IRESS, BELL POTTER SECURITIES ESTIMATES

This list was sorted by market capitalisation as at February 2018.

3 months 3 months 3 months 3 months 3 months 12 months

Stock to Jun-2018 to Sep-2018 to Dec-2018 to Mar-2019 to Jun-2019 to Jun-2019

US$ gold -2% -7% 3% 5% -1% 0%

A$ gold 2% -2% 3% 7% 4% 12%

XGD 4% -9% 12% 16% 6% 25%

NCM 2% -7% 10% 20% 15% 43%

EVN 17% -23% 25% 10% 9% 17%

NST -5% 29% 3% 8% 9% 57%

RRL 7% -19% 9% 26% -16% -7%

OGC 1% 15% -1% 19% -15% 16%

SBM 13% -24% 24% 0% -40% -43%

SAR 21% -19% 58% 2% 23% 61%

RSG 5% -17% 0% 13% -11% -17%

GOR -13% -13% -1% 43% 10% 35%

WGX 14% -24% -33% 33% 37% -8%

DCN -10% -19% -10% 36% -84% -84%

PRU 2% -22% 9% 28% 0% 8%

AMI 46% 17% 13% 30% -42% -2%

WAF -17% -6% -19% 10% 17% -2%

RMS 24% -22% 1% 54% 24% 51%

PNR 0% -31% 0% 17% -23% -37%

CDV -19% 3% -12% -11% -13% -29%

GCY 2% -44% -60% -13% -60% -92%

SLR 62% -18% 4% 53% 11% 44%

BDR -30% -31% -2% 5% 41% 0%

MOY -7% 8% -19% -2% -63% -68%

EAR -11% -53% -8% 89% -29% -41%

ARV 0% 0% -35% -53% -32% -79%

DRM 15% 2% 13% 42% 13% 85%

RED 25% -26% 28% 69% 19% 91%

MML 6% -44% -11% 27% 19% -25%

BRB -56% 34% -3% 32% -28% 24%

TRY 41% -15% 9% -17% -1% -24%

AWV -30% -60% -50% 100% -44% -78%

BSR 50% -10% 0% -5% -6% -19%

PRX -7% -3% -26% 17% 12% -6%

CAI -7% -18% -9% 0% -7% -31%

BLK -24% -44% 5% -36% -64% -86%

KSN 10% 0% -23% 18% -29% -36%

RTG -21% -5% 19% -24% -21% -32%

Average 3% -15% -3% 18% -11% -9%


GOLD IN CHARTS - PRICES

Both the US$ and A$ gold prices have maintained momentum after breaking out in mid–December 2018. It could be argued

they are looking a little toppy but we reckon it looks more like consolidation before maybe going again. The US$ gold price is

at the top of its range and 200dma’s don’t look too extended. The A$ gold price has benefitted from a weakening currency and

after making new all-time highs in January and February has trucked on to trade as high as A$1,977/oz this week.

Figure 15 – Rolling 2yr US$ gold price and 200dma divergence Figure 16 – Rolling 2yr A$ gold price and 200dma divergence

SOURCE: IRESS, BELL POTTER ESTIMATES SOURCE: IRESS, BELL POTTER ESTIMATES

Silver has seen some positive sentiment but remains range-bound. We view this as an indication that we are still in the

relatively early stages of market momentum shifting towards gold and silver. In a strong bull market we would expect to see

silver outperforming gold.

Figure 17 – Rolling 2yr US$ silver price and 200dma divergence Figure 18 – Rolling 2yr A$ silver price and 200dma divergence


The gold:silver ratio is a key measure of bullish sentiment, in our view, and the trend of gold outperformance has continued,

hitting a +25yr high at >90:1 vs the 10yr average of 66:1. Gold has recovered from fresh +10-year lows vs the DJIA in Sep-18,

but mean reversion on both these metrics points to significant potential outperformance.

Figure 19 – Gold:Silver ratio (10 years) Figure 20 – Gold vs DJIA (10 years)


-10%

10%

30%

50%

70%

90%

$1,000

$1,050

$1,100

$1,150

$1,200

$1,250

$1,300

$1,350

$1,400

Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19

% from 200dma US$gold 100dma 50dma

-10%

10%

30%

50%

70%

90%

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

$2,000


% from 200dma A$gold 100dma 50dma

-10%

10%

30%

50%

70%

90%

$10

$11

$12

$13

$14

$15

$16

$17

$18

$19


% from 200dma US$silver 100dma 50dma

-10%

10%

30%

50%

70%

90%

$14

$15

$16

$17

$18

$19

$20

$21

$22

$23

$24


% from 200dma A$ silver 100dma 50dma

20

30

40

50

60

70

80

90

100

Gold/Silver Avg

0

2

4

6

8

10

12

14

16

18

Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19

Gold/DJIA Avg


GOLD IN CHARTS – EQUITY PERFORMANCE AND INDICATORS

The charts below monitor the performance of gold equities vs gold bullion. Relative outperformance of the equities is, in our

view, a good indicator of positive sentiment. We can see some clear differences here – the large-cap dominated GDX is

showing clear outperformance of the smaller-cap GDXJ, and the ASX-Gold Index (XGD) has maintained clear outperformance

of both, making a new high relative to the A$ gold price just this week.

Figure 21 – Relative performance: GDX vs US$ gold Figure 22 – Relative performance: GDXJ vs US$ gold


Renewed interest in gold ETF holdings has been shown, after peaking in January 2019 – helpful for sentiment.

Figure 23 – Relative performance: XGD vs A$ gold Figure 24 – Total known ETF gold holdings

SOURCE: IRESS, BELL POTTER ESTIMATES SOURCE: BLOOMBERG

Real interest rates (as measured by US 5yr TIPS) rolled over in early January and increasingly held views of a dovish

monetary policy outlook and soft inflation data have seen them fall back to 12-month lows. However, the recent bounce in the

US$ gold price seems to have been driven more by the safe-haven trade and we still think there is some catching up for it do

vs much lower real interest rates and a weak inflation outlook.

Figure 25 – US Treasury 5yr Inflation Protected Securities Figure 26 – US$ Index (DXY)

SOURCE: BLOOMBERG SOURCE: BLOOMBERG

1.25

1.50

1.75

2.00


GDX vs US$ Gold

1.5

2.0

2.5

3.0

3.5


GDXJ vs US$ Gold

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4


XGD vs A$ Gold

40,000

45,000

50,000

55,000

60,000

65,000

70,000

75,000


ko

z A

u

Global gold ETF holdings

-0.60%

-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%


US 5yr TIPS

80

82

84

86

88

90

92

94

96

98

100


US$ Index (DXY)


Resource sector risks

Risks to MOY include, but are not limited to:

- Funding and capital management risks. Funding and capital management risks can

include access to debt and equity finance, maintaining covenants on debt finance,

managing dividend payments and managing debt repayments.

- Operating and development risks. Mining companies’ assets are subject to risks

associated with their operation and development. Risks for each company can be

heightened depending on method of operation (e.g. underground versus open pit

mining) or whether it is a single mine company. Development of mining assets may be

subject to receiving permits, approvals timelines or weather events, causing delays to

commissioning and commercial production.

- Operating and capital cost fluctuations. Markets for exploration, development and

mining inputs can fluctuate widely and cause significant differences between planned

and actual operating and capital costs. Key operating costs are linked to energy and

labour costs as well as access to, and availability of, technical skills, operating

equipment and consumables.

- Commodity price and exchange rate fluctuations. The future earnings and

valuations of exploration, development and operating resource companies are subject

to fluctuations in underlying commodity prices and foreign currency exchange rates.

- Resource growth and mine life extensions. The viability of future operations and

earnings forecasts and valuations reliant upon them may depend upon resource and

reserve growth to extend mine lives.

- Regulatory changes risks. Changes to the regulation of infrastructure and taxation

(among other things) can impact the earnings and valuation of mining companies.

- Corporate/M&A risks. Risks associated with M&A activity including differences

between the entity’s and the market’s perception of value associated with completed

transactions.


Regis Resources (RRL) as at 20 June 2019

Recommendation Buy

Price $4.66

Target (12 months) $5.40

Table 4 - Financial summary

SOURCE: BELL POTTER SECURITIES ESTIMATES


PROFIT AND LOSS FINANCIAL RATIOS

Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e

Revenue $m 547.2 607.8 639.9 706.5 771.2 VALUATION

Operating expenses $m (293.2) (294.5) (324.9) (363.8) (390.5) NPAT $m 138.2 174.2 170.0 196.9 196.7

Exploration $m (0.8) (0.9) (9.0) (8.2) (8.2) Basic EPS c/sh 26.6 34.6 33.9 39.3 39.3

EBITDA $m 253.2 312.4 306.1 334.6 372.6 Basic EPS growth % 23% 25% -2% 16% 0%

Depreciation and amortisation $m (57.5) (64.3) (65.4) (67.8) (73.0) Adjusted EPS c/sh 27.6 34.6 33.9 39.3 39.3

EBIT $m 195.7 248.1 240.7 266.8 299.5 Adjusted EPS growth % 23% 26% -2% 16% 0%

Net interest expense/income $m 0.4 0.8 4.4 5.8 7.3 PER x 17.5x 13.5x 13.7x 11.9x 11.9x

PBT $m 196.1 248.9 245.1 272.5 306.9 DPS c/sh 15 16 20 24 24

Tax expense $m (58.0) (74.7) (75.1) (75.7) (110.2) Franking % 100% 100% 100% 100% 100%

NPAT adjusted $m 138.2 174.2 170.0 196.9 196.7 Yield % 3.2% 3.4% 4.3% 5.2% 5.2%

Adjustments $m 4.9 0.1 - - - FCF/share c/sh 20 28 27 30 53

NPAT reported $m 133.2 174.1 170.0 196.9 196.7 P/CFPS x 23.4x 16.6x 17.0x 15.3x 8.8x

EV/EBITDA x 8.6x 7.0x 7.1x 6.5x 5.9x

CASH FLOW EBITDA margin % 46% 51% 48% 47% 48%

Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e EBIT margin % 36% 41% 38% 38% 39%

OPERATING CASHFLOW Return on assets % 22% 23% 20% 21% 19%

Receipts $m 540.0 608.2 639.1 705.6 771.1 Return on equity % 27% 30% 24% 25% 23%

Payments $m (300.4) (314.8) (350.4) (354.3) (390.3) LIQUIDITY & LEVERAGE

Tax $m (36.2) (36.9) (75.1) (75.7) (110.2) Net debt (cash) $m (142.0) (201.4) (239.1) (272.1) (420.1)

Net interest $m 1.4 2.0 4.4 5.8 7.3 ND / E % -26% na na na na

Other $m 1.3 1.2 0.0 0.0 0.0 ND / (ND + E) % -36% na na na na

Operating cash flow $m 206.1 259.7 218.0 281.5 278.0 EBITDA / Interest x na na na na na

INVESTING CASHFLOW

Capex - Property, plant & equipment $m (23.4) (37.5) (46.5) (79.0) 0.0 ASSUMPTIONS - Production & costs

- Mine properties $m (40.3) (31.9) 0.0 0.0 0.0 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e

- Mine development $m (9.5) (14.1) (23.3) (39.5) 0.0 Gold production

- Exploration & evaluation $m (35.7) (33.9) (9.0) (8.2) (8.2) Duketon Northern koz 100.9 106.9 102.9 90.9 90.9

- Total $m (108.9) (117.4) (78.7) (126.6) (8.2) Duketon Southern koz 223.5 254.4 264.0 289.9 319.4

Intangible assets $m 0.0 (0.1) 0.0 0.0 0.0 McPhillamys koz

Other $m 4.2 0.0 0.0 0.0 0.0 Total koz 324.4 361.4 366.9 380.8 410.3

Investing cash flow $m (104.8) (117.6) (78.7) (126.6) (8.2)

Free cash flow $m 101.3 142.1 139.3 154.8 269.8 All In Sustaining Costs

FINANCING CASHFLOW Duketon Northern A$/oz 785 827 909 914 914

Share issues/(buy-backs) $m 0.2 1.8 0.0 0.0 0.0 Duketon Southern A$/oz 1,017 932 952 942 886

Debt proceeds/(repayments) $m 0.0 0.0 0.0 0.0 0.0 Total A$/oz 945 901 940 935 892

Dividends $m (80.1) (80.7) (101.5) (121.8) (121.8)

Other $m (1.5) (1.6) 0.0 0.0 0.0

Financing cash flow $m (81.4) (80.4) (101.5) (121.8) (121.8) ASSUMPTIONS - Prices (nominal)

Change in cash $m 19.9 61.7 37.7 33.0 147.9 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e

Gold - Spot US$/oz 1,259 1,300 1,272 1,400 1,420

BALANCE SHEET Currency - AUD/USD US$/A$ 0.75 0.78 0.73 0.75 0.75

Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e

ASSETS

Cash & bullion $m 144.4 202.3 240.0 273.0 420.9 Valuation

Accounts receivable $m 6.8 6.0 6.8 7.7 7.8 Issued capital m

Inventory $m 74.8 89.4 89.4 89.4 89.4 Shares on issue 507.7

Property, plant & equipment $m 182.4 195.3 176.5 187.7 114.6 Options 2.5

Exploration & evaluation $m 151.7 171.6 171.6 171.6 171.6 Total diluted shares on issue 510.3

Mine properties & development $m 123.2 153.7 177.0 216.4 216.4 DCF sum-of-parts valuation

Other $m 2.5 4.3 4.3 4.3 4.3 A$m $/sh A$m $/sh A$m $/sh

Total assets $m 685.9 822.5 865.5 950.0 1,025.1 Moolart Well 371 0.73 384 0.75 360 0.70

LIABILITIES Garden Well 855 1.68 901 1.77 888 1.74

Accounts payable $m 43.7 48.6 23.1 32.6 32.8 Rosemont 493 0.97 522 1.02 522 1.02

Borrowings $m 2.3 0.8 0.8 0.8 0.8 Erlistoun/Baneygo 121 0.24 123 0.24 126 0.25

Dividends payable $m - - - McPhillamys 205 0.40 205 0.40 205 0.40

Other $m 101.4 136.2 136.2 136.2 136.2 Exploration 210 0.41 210 0.41 210 0.41

Total liabilities $m 147.5 185.7 160.2 169.7 169.9 Corporate (21) (0.04) (17) (0.03) (11) (0.02)

SHAREHOLDER'S EQUITY Total enterprise value 2,233 4.38 2,328 4.56 2,299 4.51

Share capital $m 431.5 433.2 433.2 433.2 433.2 Net cash + bullion / (debt) 273 0.54 421 0.82 186 0.36

Reserves $m 26.9 30.0 30.0 30.0 30.0 Equity Value 2,506 4.91 2,749 5.39 2,485 4.87

Retained earnings $m 80.0 173.6 242.1 317.1 392.0

Total equity $m 538.4 636.8 705.3 780.4 855.2

Weighted average shares m 500.8 507.7 507.7 507.7 507.7

2019e 2020e 2021e


Pantoro Limited (PNR) as at 20 June 2019

Recommendation Buy

Price $0.165





Year ending June Unit 2017a 2018a 2019e 2020e 2021e Year ending June Unit 2017a 2018a 2019e 2020e 2021e


Expense $m (41.4) (53.3) (56.3) (65.3) (65.4) NPAT $m (15.7) 13.8 11.5 54.0 54.2

EBITDA $m 22.6 33.9 30.7 91.9 97.4 Reported EPS c/sh (2.2) 1.8 1.2 4.6 4.6

Depreciation $m (17.0) (19.4) (19.2) (21.8) (22.8) Adjusted EPS c/sh 0.8 1.9 1.2 4.6 4.6

EBIT $m 5.6 14.5 11.5 70.1 74.6 EPS growth % nm nm -33% 292% 0%

Net interest expense $m - 0.1 - 1.6 2.8 PER x nm 9.4x 14.1x 3.6x 3.6x

Unrealised gains (Impairments) $m (21.3) (1.0) - - - DPS c/sh - - - - -

Other $m (0.0) (0.0) - - - Franking % 0% 0% 0% 0% 0%

PBT $m (15.7) 13.6 11.5 71.7 77.4 Yield % 0% 0% 0% 0% 0%

Tax expense $m - (0.2) - 17.7 23.2 FCF/share c/sh (0.3) 0.1 (0.1) 4.1 2.8

NPAT (reported) $m (15.7) 13.8 11.5 54.0 54.2 P/FCFPS x -50.1x 111.7x -148.0x 4.1x 5.9x

NPAT (underlying) $m 5.5 14.7 11.5 54.0 54.2 EV/EBITDA x 6.2x 4.1x 4.6x 1.5x 1.4x

EBITDA margin % 35% 39% 35% 58% 60%

CASH FLOW EBIT margin % 9% 17% 13% 45% 46%

Year ending June Unit 2017a 2018a 2019e 2020e 2021e Return on assets % -36% 24% 12% 32% 23%

OPERATING CASHFLOW Return on equity % -62% 37% 14% 38% 28%

Receipts $m 59.4 79.8 86.5 151.1 162.5 LIQUIDITY & LEVERAGE

Payments $m (39.9) (48.2) (55.8) (63.0) (65.4) Net debt (cash) $m - - (65) (113) (145)

Tax $m - - - - (17.7) ND / E % 0% 0% -56% -67% -65%

Net interest $m 0.0 0.0 - 1.6 2.8 ND / (ND + E) % 0% 0% -129% -201% -187%

Other $m 0.0 0.0 3.3 - - EBITDA / Interest x nm -473.0x nm -56.2x -34.4x

Operating cash flow $m 19.5 31.6 34.0 89.7 82.2INVESTING CASHFLOW ORE RESERVE AND MINERAL RESOURCE

Property, plant and equipment $m (2.5) (10.5) (13.6) (12.2) (11.3) Nicolsons Gold Mine Mt g/t Au (koz)

Mine development $m (18.0) (16.0) (7.3) (8.2) (7.5) Mineral Resources

Exploration & evaluation $m (1.4) (4.3) (4.2) (6.4) (4.8) Measured 0.303 11.9 116.0Other $m (0.0) 0.4 (10.0) (15.0) (26.0) Indicated 0.882 7.1 202.0Investing cash flow $m (21.9) (30.5) (35.1) (41.8) (49.6) Inferred 0.287 8.1 75.0Free Cash Flow $m (2.4) 1.2 (1.1) 47.9 32.6 Total 1.472 8.3 394.0

Ore ReserveFINANCING CASHFLOW Proven 0.310 9.2 92.0Share issues/(buy-backs) $m 4.0 1.6 58.0 - - Probable 0.654 6.0 126.0

Debt proceeds $m 3.2 - - - - Total 0.964 7.1 219.0

Debt repayments $m - (0.6) - - - Central Norseman Gold Project (CNGP) Mt g/t Au (koz)

Dividends $m - - - - - Mineral Resources

Other $m - - (3.3) - - Measured 4.600 1.6 240.0Financing cash flow $m 7.2 0.9 54.8 - - Indicated 12.710 3.7 1,510.0Change in cash $m 4.8 2.1 53.7 47.9 32.6 Inferred 18.210 4.2 2,480.0

Total 35.510 3.9 4,410.0

BALANCE SHEET

Year ending June Unit 2017a 2018a 2019e 2020e 2021e ASSUMPTIONS - Prices

ASSETS Year ending June (avg) Unit 2017a 2018a 2019e 2020e 2021e

Cash & short term investments $m 9.7 11.8 65.4 113.3 145.9

Accounts receivable $m 1.2 1.2 1.7 7.9 8.1 Gold US$/oz $1,259 $1,300 $1,274 $1,400 $1,420

Property, plant & equipment $m 10.0 17.2 23.1 26.6 28.8 Silver US$/oz $18 $17 $15 $16 $17

Mine development expenditure $m 22.1 26.0 27.6 29.2 29.9 Gold A$/oz $1,669 $1,678 $1,769 $1,905 $1,893

Exploration & evaluation $m 2.3 2.2 0.5 0.4 (1.6) Silver A$/oz $24 $22 $21 $22 $22

Other $m 5.3 5.0 15.0 30.0 56.0 Currency

Total assets $m 50.5 63.3 133.4 207.3 267.1 AUD:USD A$/US$ 0.75 0.78 0.72 0.74 0.75

LIABILITIES

Accounts payable $m 11.2 13.5 14.1 16.3 16.3 ASSUMPTIONS - Production & costs

Income tax payable $m - - - 17.7 23.2 Year ending June Unit 2017a 2018a 2019e 2020e 2021e

Borrowings $m - 0.6 0.6 0.6 0.6 Gold production

Unearned income $m 7.4 - - - - Ore tonnes processed kt 167.2 230.9 211.0 240.0 250.0

Other $m 2.7 3.8 3.8 3.8 3.8 Head grade g/t Au 7.6 7.6 7.7 11.5 11.5

Total liabilities $m 21.3 17.9 18.5 38.5 44.0 Gold produced koz 39.1 52.2 48.8 82.5 86.0

SHAREHOLDER'S EQUITY Costs

Share capital $m 173.4 175.0 233.0 233.0 233.0 Cash costs / oz Au A$/oz $928 $911 $1,105 $746 $700

Reserves $m 6.3 7.1 7.1 7.1 7.1 All-in-Sustaining-Costs (AISC) A$/oz $1,145 $1,130 $1,317 $955 $918

Retained earnings $m (150.4) (136.7) (125.2) (71.2) (17.0)

Total equity $m 29.3 45.4 114.9 168.9 223.1 VALUATION

Weighted average shares m 731.1 782.6 982.7 1,175.9 1,175.9 Ordinary shares (m) 1,175.9

Options in the money (m) 2.0

CAPITAL STRUCTURE Diluted m 1,177.9

Shares on issue m 1,075.9 Sum-of-the-parts $m $/sh $m $/sh $m $/sh

Total shares on issue m 1,175.9 Project (unrisked NPV10) 195.2 0.17 211.7 0.18 186.7 0.16

Share price $/sh 0.165 Other exploration 190.0 0.16 190.0 0.16 190.0 0.16

Market capitalisation $m 194.0 Corporate overheads (63.0) (0.05) (58.9) (0.05) (49.3) (0.04)

Net cash $m 53.7 Subtotal 322.2 0.27 342.8 0.29 327.4 0.28

Enterprise value (undiluted) $m 140.3 Net cash (debt) 53.7 0.05 65.4 0.06 113.3 0.10

Options outstanding (m) m (wtd avg ex. price $0.19 per share) 16.2 Total (undiluted) 375.9 0.32 408.2 0.35 440.6 0.37

Options (in the money) m 2.0 Add options in the money (m) 2.0 2.0 2.0

Issued shares (diluted for options) m 1,177.9 Add cash - - - - - -

Market capitalisation (diluted) m 194.4 Total (diluted) 375.9 0.32 408.2 0.35 440.6 0.37

Net cash + options $m 53.7

Enterprise value (diluted) $m 140.7

MAJOR SHAREHOLDERS

Shareholder % m

Robmar Investments 16.5% 177.7

FY19 FY20 FY21


Dacian Gold Ltd (DCN) as at 20 June 2019

Recommendation Hold (Speculative)

Price $0.54

Valuation $0.55




Year ending June Unit 2017a 2018a 2019e 2020e 2021e Year ending June Unit 2017a 2018a 2019e 2020e 2021e


Expense $m (20.3) (33.5) (206.5) (188.6) (197.7) NPAT $m (19) (5) (30) 27 3

EBITDA $m (19.5) (32.1) 29.7 91.1 65.1 Reported EPS c/sh (12) (3) (22) 20 3

Depreciation $m (0.3) (0.5) (52.2) (59.1) (57.0) EPS growth % na na na na -87%

EBIT $m (19.8) (32.6) (22.5) 32.1 8.1 PER x -4.6x -20.6x -2.4x 2.7x 21.1x

Net interest expense $m (0.0) (0.3) (7.5) (5.5) (4.7) DPS c/sh - - - - -

PBT $m (19.8) (32.9) (29.9) 26.6 3.4 Franking % 0% 0% 0% 0% 0%

Tax expense $m 0.9 27.5 - - - Yield % 0% 0% 0% 0% 0%

NPAT $m (18.9) (5.4) (29.9) 26.6 3.4 FCF/share c/sh (0) (1) (0) 0 0

P/FCFPS x -1.8x -0.6x -12.2x 1.2x 1.5x

CASH FLOW EV/EBITDA x -9.1x -5.5x 5.9x 1.9x 2.7x

Year ending June Unit 2017a 2018a 2019e 2020e 2021e EBITDA margin % nm nm 13% 33% 25%

OPERATING CASHFLOW EBIT margin % nm nm nm 11% 3%

Receipts $m - - 227.0 277.3 262.6 Return on assets % -21% -2% -9% 9% 1%

Payments $m (4.7) (2.1) (212.7) (188.6) (192.3) Return on equity % -26% -4% -25% 23% 3%

Exploration payments $m (13.5) (17.2) (3.6) (3.6) (3.6) LIQUIDITY & LEVERAGE

Tax $m - - - - - Net debt (cash) $m (89) 103 109 47 (2)

Net interest $m 0.2 1.7 (6.2) (5.2) (3.5) ND / E % -66% 78% 106% 36% -2%

Other $m 1.5 (0.0) - - - ND / (ND + E) % -194% 44% 51% 27% -2%

Operating cash flow $m (16.6) (17.5) 4.5 79.9 63.2 EBITDA / Interest x - - -4.0x -16.7x -13.9x

INVESTING CASHFLOW

Capex $m (1.0) (0.2) (10.4) (17.4) (14.4) ORE RESERVE AND MINERAL RESOURCEExploration & evaluation $m - - - - - Mt Morgans (WA) Mt g/t Au koz AuOther $m (31.4) (160.0) - - - Total resource 54.7 2.0 3,520

Investing cash flow $m (32.5) (160.2) (10.4) (17.4) (14.4) Measured 7.7 1.8 453

FINANCING CASHFLOW Indicated 32.4 1.9 1,992

Share issues/(buy-backs) $m 132.1 1.5 - - - Inferred 14.6 2.3 1,075Debt proceeds/(repayments) $m - 150.0 (44.5) (17.9) (27.3) Total Reserve 26.7 1.6 1,389Dividends $m - - - - - Proven 6.8 1.3 284

Other $m (2.6) (1.0) - - - Probable 19.9 1.7 1,105

Financing cash flow $m 129.6 150.5 (44.5) (17.9) (27.3)Change in cash $m 80.5 (27.3) (50.4) 44.6 21.4

CONCEPTUAL PROJECT ASSUMPTIONS - MT MORGANSBALANCE SHEET Year ending June 30 FY17 FY18 FY19 FY20 FY21

Year ending June Unit 2017a 2018a 2019e 2020e 2021e Currency US$/A$ 0.75 0.78 0.72 0.74 0.75

ASSETS Gold price A$/oz $1,669 $1,677 $1,769 $1,905 $1,893

Cash & short term investments $m 90.2 62.9 12.4 57.0 78.5Accounts receivable $m 3.4 0.4 0.1 3.4 3.7 CAPEX - development A$m (88) (132) - - -

Property, plant & equipment $m 62.4 253.1 211.3 169.6 127.0 CAPEX - sustaining A$m - (12) (8) (15) (12)

Exploration & evaluation $m 4.2 4.2 4.2 4.2 4.2 Ore milled Mt - 0.60 2.50 2.51 2.50

Other $m 0.3 44.5 52.9 51.8 50.6 Head grade g/t Au - 1.9 1.9 2.1 2.1

Total assets $m 160.4 365.1 280.9 286.0 264.0 Recovery % - 91% 92% 92% 92%

LIABILITIES Production koz - 34.2 140.5 159.0 153.5

Accounts payable $m 16.7 51.3 41.5 37.9 39.7 AISC A$/oz - 1,584 1,524 1,278 1,364

Borrowings $m 1.5 166.1 121.6 103.8 76.5

Other $m 7.8 14.8 14.8 14.8 14.8 VALUATION

Total liabilities $m 26.1 232.2 177.9 156.5 131.0 Ordinary shares (m) 226.4

SHAREHOLDER'S EQUITY Options in the money (m) 2.0

Share capital $m 191.8 195.2 195.2 195.2 195.2 Diluted m 228.4

Reserves $m 3.0 3.5 3.5 3.5 3.5

Retained earnings $m (60.4) (65.8) (95.8) (69.2) (65.7) $m $/sh

Total equity $m 134.3 132.9 102.9 129.5 133.0 Project (unrisked NPV10) 187 0.82

Weighted average shares m 158.3 205.0 133.3 133.3 133.3 Project (risk discount 0%, NPV10) 187 0.82

Other exploration 12 0.05

CAPITAL STRUCTURE Corporate overheads (20) (0.09)

Subtotal 178 0.78

Shares on issue m 225.7 Cash & options (53) (0.23)

Performance shares / other m 0.7 Total (diluted) 126 0.55

Total shares on issue m 226.4 Cash from equity raise - -

Share price $/sh 0.54 Total (diluted post equity raise) 126 0.55

Market capitalisation $m 123.2

Net cash $m -53.3

Enterprise value (undiluted) $m 176.5

Options outstanding (m) m (wtd avg ex. price $1.10 per share) 5.3

Options (in the money) m 2.0

Issued shares (diluted for options) m 228.4

Market capitalisation (diluted) m 124.3

Net cash + options $m -52.5


MAJOR SHAREHOLDERS

% m

Colonial First State 6.2% 13.9

Directors and Management 5.8% 13.0

1832 Asset Management 4.8% 10.9

Brian Rodan 2.8% 6.2


Millennium Minerals Ltd as at 20 June 2019

Recommendation Buy

Price $0.057





Year ending December Unit 2017a 2018a 2019e 2020e 2021e Year ending December Unit 2017a 2018a 2019e 2020e 2021e


Expense $m (93.5) (118.3) (124.7) (148.3) (154.3) NPAT $m (5.6) (9.4) (8.3) 14.8 24.9

EBITDA $m 22.1 8.8 32.2 56.0 63.1 Reported EPS c/sh (0.7) (1.2) (1.0) 1.7 2.8

Depreciation $m (25.3) (15.7) (38.1) (38.8) (38.7) Adjusted EPS c/sh (0.6) (1.0) (1.0) 1.6 2.7

EBIT $m (3.2) (6.9) (5.9) 17.2 24.5 EPS growth % -132% nm nm nm 68%

Net interest expense $m 0.3 (0.0) (2.4) (2.5) 0.4 PER x nm nm nm 3.4x 2.0x

Unrealised gains (Impairments) $m (1.1) (1.5) - - - DPS c/sh - - - - -

Other $m (1.6) (1.1) - - - Franking % 0% 0% 0% 0% 0%

PBT $m (5.6) (9.4) (8.3) 14.8 24.9 Yield % 0% 0% 0% 0% 0%

Tax expense $m - - - - - FCF/share c/sh (0.9) (2.1) (2.8) 2.8 3.7

NPAT (reported) $m (5.6) (9.4) (8.3) 14.8 24.9 P/FCFPS x -6.1x -2.7x -2.0x 2.0x 1.5x

NPAT (underlying) $m (4.5) (8.0) (8.3) 14.8 24.9 EV/EBITDA x 3.0x 7.6x 2.1x 1.2x 1.1x

EBITDA margin % 19% 7% 21% 27% 29%

CASH FLOW EBIT margin % nm nm nm 8% 11%

Year ending December Unit 2017a 2018a 2019e 2020e 2021e Return on assets % -5% -8% -6% 10% 16%

OPERATING CASHFLOW Return on equity % -8% -14% -12% 19% 25%

Receipts $m 116.0 127.2 152.3 201.9 216.8 LIQUIDITY & LEVERAGE

Payments $m (85.5) (105.6) (125.4) (142.4) (152.8) Net debt (cash) $m (18) (1) 9 (15) (48)

Tax $m - - - - - ND / E % -25% -1% 13% -18% -44%

Net interest $m 0.3 (0.0) (2.4) (2.5) 0.4 ND / (ND + E) % -34% -1% 12% -22% -78%

Other $m - - 0.9 - - EBITDA / Interest x nm 2940.3x 13.5x 22.5x nm

Operating cash flow $m 30.8 21.5 25.4 57.0 64.4INVESTING CASHFLOW ORE RESERVE AND MINERAL RESOURCEProperty, plant and equipment $m (2.1) (1.7) (28.2) (13.1) (10.4) Nullagine Gold Project Mt g/t Au (koz)Mine development $m (12.7) (11.1) (12.1) (10.7) (12.7) Mineral ResourcesExploration & evaluation $m (23.3) (25.6) (9.1) (8.4) (8.4) Measured 5.690 1.6 287.6Other $m (0.0) (0.1) - - - Indicated 9.190 1.5 461.6Investing cash flow $m (38.1) (38.4) (49.4) (32.2) (31.4) Inferred 7.970 1.6 410.0

Free Cash Flow $m (7.3) (16.8) (24.0) 24.8 33.0 Total 22.850 1.6 1,159.1Ore Reserve

FINANCING CASHFLOW Proven 1.580 1.5 74.2Share issues/(buy-backs) $m 0.1 0.1 15.0 - - Probable 5.550 1.7 301.2

Debt proceeds $m - 10.0 30.3 - - Total 7.130 1.6 375.3Debt repayments $m (0.1) (5.3) (5.0) (30.0) -Dividends $m - - - - - ASSUMPTIONS - PricesOther $m (0.0) (0.6) (0.9) - - Year ending December (avg) Unit 2017a 2018a 2019e 2020e 2021eFinancing cash flow $m 0.0 4.2 39.3 (30.0) -Change in cash $m (7.3) (12.6) 15.3 (5.2) 33.0 Gold US$/oz $1,260 $1,272 $1,361 $1,410 $1,435

Silver US$/oz $17.06 $15.73 $16.07 $16.59 $16.88

BALANCE SHEET Gold A$/oz $1,644 $1,702 $1,882 $1,893 $1,913

Year ending December Unit 2017a 2018a 2019e 2020e 2021e Silver A$/oz $22.26 $21.02 $22.22 $22.27 $22.51

ASSETS Gold hedging

Cash & short term investments $m 17.9 5.3 20.6 15.5 48.4 Quantity oz Au - - 34,250 8,650 -

Accounts receivable $m 3.1 3.2 7.8 10.2 10.9 Price A$/oz - - 1,755 $1,755 -

Property, plant & equipment $m 19.5 18.2 27.4 25.0 23.7 Currency

Mine development expenditure $m 18.5 36.4 38.9 38.0 37.2 AUD:USD A$/US$ 0.77 0.75 0.72 0.75 0.75

Exploration & evaluation $m 32.4 39.9 39.5 36.2 31.1

Other $m 18.3 19.0 19.0 19.0 19.0 ASSUMPTIONS - Production & costs

Total assets $m 109.7 122.1 153.3 144.0 170.3 Year ending December Unit 2017a 2018a 2019e 2020e 2021e

LIABILITIES Gold production

Accounts payable $m 19.6 31.9 31.2 37.1 38.6 Ore tonnes processed kt 1,916 1,893 2,031 2,065 2,060

Income tax payable $m - - - - - Head grade g/t Au 1.3 1.5 1.6 1.9 2.0

Borrowings $m - 4.7 30.0 - - Gold produced koz 72.8 79.9 84.3 108.5 113.6

Other $m 19.0 21.4 21.4 21.4 21.4 Costs

Total liabilities $m 38.6 58.0 82.6 58.5 60.0 Cash costs / oz Au A$/oz $1,196 $1,310 $1,280 $1,144 $1,140

SHAREHOLDER'S EQUITY All-in-Sustaining-Costs (AISC) A$/oz $1,372 $1,419 $1,487 $1,344 $1,300

Share capital $m 165.3 165.4 180.4 180.4 180.4

Reserves $m 6.3 8.6 8.6 8.6 8.6 VALUATION

Retained earnings $m (100.5) (109.9) (118.2) (103.5) (78.6) Ordinary shares (m) 891.2

Total equity $m 71.1 64.0 70.7 85.5 110.3 Options in the money (m) 22.4

Weighted average shares m 781.3 791.3 842.7 891.0 891.0 Total shares diluted (m) 913.6

CAPITAL STRUCTURE Sum-of-the-parts $m $/sh $m $/sh $m $/sh

Project (unrisked NPV10) 110.7 0.12 131.1 0.15 116.5 0.13

Shares on issue m 891.2 Other exploration 15.0 0.02 15.0 0.02 15.0 0.02

Total shares on issue m 891.2 Corporate overheads (30.3) (0.03) (25.7) (0.03) (21.7) (0.02)

Share price $/sh 0.057 Subtotal 95.4 0.11 120.3 0.14 109.7 0.12

Market capitalisation $m 50.8 Net cash (debt) (16.4) (0.02) (9.4) (0.01) 15.5 0.02

Net cash $m -16.4 Total (undiluted) 79.0 0.09 111.0 0.12 125.2 0.14

Enterprise value (undiluted) $m 67.2 Dilutive effect of options (0.00) (0.00) (0.00)

Options outstanding (m) m (wtd avg ex. price $7.73 per share) 95.8 Add cash from options - - - - - -

Options (in the money) m 22.4 Total (diluted) 79.0 0.09 111.0 0.12 125.2 0.14

Issued shares (diluted for options) m 913.6

Market capitalisation (diluted) $m 52.1

Net cash + options $m -16.4


MAJOR SHAREHOLDERS

Shareholder % m

IMC Group 47.4% 422.1

Now 2019e 2020e


Gold Road Resources Ltd as at 20 June 2019

Recommendation Hold (Speculative)

Price $0.965

Valuation $1.15




Y ear t o 3 0 Jun f o r F Y , 3 1 D ec f or C Y Unit 20171a 2018e 2019e 2020e 2021e Y ear t o 3 0 Jun f o r FY , 3 1 D ec f o r C Y Unit 20171a 2018e 2019e 2020e 2021e

Revenue A$m 0.0 0.0 101.7 259.8 269.6 NPAT (adjusted) A$m (7.7) (24.4) 10.4 63.2 67.9

Expenses A$m (11.6) (34.3) (73.7) (141.6) (148.8) Adjusted EPS A¢/shr (0.9) (2.8) 1.2 7.2 7.7

EBITDA A$m (7.7) (36.4) 27.9 118.2 120.8 EPS grow th % na na na 509% 8%

Depreciation and amortisation A$m (0.3) (0.7) (12.2) (29.5) (30.3) PER x na na 81.7 13.4 12.5

EBIT A$m (8.0) (37.1) 15.7 88.7 90.6 DPS A¢/shr - - - 1.0 2.0

Net interest income (expense) A$m (3.0) 3.0 (0.9) (0.3) 4.5 Yield % - - - 1% 2%

PBT A$m (10.9) (34.1) 14.8 88.3 95.0 Franking % - - - 100% 100%

Tax (Expense) Benefit A$m (3.2) 9.7 (4.4) (25.2) (27.1) Free Cash Flow (FCF) A$m (51.8) (199.6) (21.0) 100.9 93.6

NPAT (reported) A$m (7.7) (24.4) 10.4 63.2 67.9 FCF / share A¢/shr na na na 11.5 10.7

Adjustments (after-tax) A$m 0.0 0.0 0.0 0.0 0.0 Price / FCF x na na na 8.4 9.0

NPAT (adjusted) A$m (7.7) (24.4) 10.4 63.2 67.9 FCF yield % na na na 12% 11%

No te 1. For 6 months transitional period EV / EBITDA x na na 30.6 7.2 na

PROFIT AND LOSS (INTERIM) EV / EBIT x na na 54.4 9.6 na

Half year ending Unit Jun-17a Dec-17a Jun-18a Dec-18a Jun-19e EBITDA margin % na na 27% 45% 45%

Revenue A$m 0.0 0.0 0.0 0.0 0.0 EBIT margin % na na 15% 34% 34%

Expenses A$m (7.5) (11.6) (5.0) (31.5) (11.8) Return on assets % na na 2% 11% 11%

EBITDA A$m (7.5) (1.3) (5.0) (31.5) (11.8) Return on equity % na na 3% 17% 16%

Depreciation and amortisation A$m (0.3) (0.3) (0.3) (0.4) (0.7) LIQUIDITY & LEVERAGE

EBIT A$m (7.8) (1.6) (5.3) (31.8) (12.5) Net Debt (Cash) A$m (237) 74 96 (5) (91)

Net interest income (expense) A$m 4.0 (3.0) 2.5 0.8 0.4 Net Debt / Equity % na 22% 27% na na

PBT A$m (3.8) (4.6) (3.0) (31.1) (12.1) Net Debt / (Net Debt + Equity) % na 18% 22% na na

Tax (Expense) Benefit A$m 1.1 (3.2) 0.7 9.0 0.0 Net Debt / Total Assets % na 15% 18% na na

NPAT (reported) A$m (2.7) (7.7) (2.3) (22.0) (12.1) Net Debt / EBITDA % na na 343% na na

Adjustments (after-tax) A$m 0.0 0.0 0.0 0.0 EBITDA / Interest x (3) na 30 380 na

NPAT (adjusted) A$m (2.7) (7.7) (2.3) (22.0) (12.1) No te 1. For 6 months transitional period

ASSUMPTIONS - Prices

CASH FLOW Y ear t o 3 0 Jun f o r FY , 3 1 D ec f o r C Y Unit 20171a 2018e 2019e 2020e LT real

Y ear t o 3 0 Jun f o r F Y , 3 1 D ec f or C Y Unit 20171a 2018e 2019e 2020e 2021e GOLD - Spot US$/oz 1,281 1,272 1,361 1,410 1,420

OPERATING CASH FLOW CURRENCY - USD / AUD US$/A$ 0.78 0.75 0.72 0.75 0.75

Receipts A$m 0.0 0.0 102.0 260.2 270.0

Payments A$m (4.0) (8.0) (56.4) (131.1) (138.0) ASSUMPTIONS - Production (Equity share)

Tax A$m (0.4) 0.0 0.0 0.0 (14.9) Y ear t o 3 0 Jun f o r FY , 3 1 D ec f o r C Y Unit 20171a 2018e 2019e 2020e 2021e

Net interest A$m 3.4 4.7 (4.3) (0.3) 4.5 Gold production koz 57.5 138 141

Other A$m 0.2 0.2 0.0 0.0 0.0 All in sustaining cost A$/oz 1,190 1,085 1,111

Operating cash flow A$m (0.8) (3.1) 41.3 128.7 121.5 No te 1. For 6 months transitional period

INVESTING CASH FLOW RESOURCE BASE - Equity Share

Cap Ex and exploration A$m (51.0) (196.5) (62.3) (27.8) (27.9) Deposit Unit Measured Indicated Inferred Total g/t Au

Other A$m (0.6) 0.1 0.0 0.0 0.0 Gruyere koz 308 1,856 728 2,892 1.29

Investing cash flow A$m 86.0 (190.2) (66.0) (29.8) (29.0) Golden Highw ay/YAM14 koz 9 270 84 363 1.45

FINANCING CASH FLOW Central Bore koz 50 50 13.05

Net equity proceeds A$m 0.3 0.0 0.0 0.0 0.0 Total koz 317 2,125 863 3,306 1.32

Debt proceeds A$m 0.0 3.0 40.0 0.0 0.0

Debt repayments A$m 0.0 0.0 0.0 (25.0) (18.0) CAPITAL STRUCTURE

Dividends A$m 0.0 0.0 0.0 0.0 (8.8) Issued Securities Unit

Other A$m 0.0 (2.6) 0.0 0.0 0.0 Ordinary shares m 878.0

Financing cash flow A$m 0.3 0.4 40.0 (25.0) (26.8) Performance rights (various expiries and conditions) m 7.5

Change in cash A$m 85.5 (192.8) 15.3 73.9 65.8 Total Securities m 885.5

No te 1. For 6 months transitional period

Balance Sheet ($M) Substantial and Directors/Management Shareholdings

Y ear t o 3 0 Jun f o r F Y , 3 1 D ec f or C Y Unit 20171a 2018e 2019e 2020e 2021e M (%)

ASSETS Gold Fields Group 87.1 9.9% 17/05/17

Cash and short term investments A$m 236.8 44.0 59.2 133.2 198.9 BlackRock Group 82.0 9.3% 28/05/19

Accounts receivable A$m 19.2 13.4 13.9 14.8 16.3 Sun Valley Gold Master Fund 71.1 8.1% 27/03/19

Inventory A$m 0.1 1.2 5.7 6.3 6.8 Directors and management 5.4 0.6% various

Property, plant & equipment A$m 130.6 411.7 441.6 423.2 401.0

Exploration & development A$m 3.7 13.0 14.5 30.1 45.9 VALUATION

Other A$m 0.8 12.0 8.0 7.9 6.7 Now +12 months

Total assets A$m 391.2 495.3 542.9 615.4 675.6

LIABILITIES Exploration - Gruyere JV area 864 0.98 944 1.07 975 1.10

Accounts payable A$m 17.9 11.6 18.5 33.7 40.1 - North Yamarna area 68 0.08 68 0.08 68 0.08

Borrow ings A$m 0.0 117.6 155.0 128.0 108.0 - South Yamarna area 27 0.03 27 0.03 27 0.03

Other A$m 11.1 27.2 20.1 47.1 79.3 - Total 960 1.08 1,040 1.17 1,071 1.21

Total liabilities A$m 28.9 156.4 193.6 208.8 227.3 Corporate costs (37) (0.04) (37) (0.04) (33) (0.04)

SHAREHOLDERS EQUITY Net financials4 (8) (0.01) 16 0.02 115 0.13

Share capital A$m 203.9 203.9 203.9 203.9 203.9 Total 916 1.03 1,020 1.15 1,153 1.30

Reserves A$m 1.1 1.3 1.3 1.3 1.3

Retained earnings A$m 157.2 133.7 144.1 201.4 243.0 Notes: 2. May not add because of rounding and dilution effects;

Total equity A$m 362.3 339.0 349.3 406.6 448.2 3. Fully diluted basis using total of 885.5m securities (includes all performance rights); and

Weighted average shares m 875 877 878 878 878 4. Includes cash and equivalents but excludes gas pipeline and pow er station payables.

No te 1. For 6 months transitional period

+24 months

$ m 2 $ per share 2, 3 $ m 2 $ per share 2, 3

Date of change

$ m 2 $ per share 2, 3


Westgold Resources Ltd as at 20 June 2019

Recommendation Buy

Price $1.635





Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e

Revenue $m 308 377 471 585 679 VALUATION

Operating expenses $m (227) (304) (395) (393) (441) Normalised NPAT $m 16 (1) (26) 60 89

EBITDA $m 81 72 76 192 238 Normalised EPS c/sh 5 (0) (7) 15 23

Depreciation and amortisation $m (57) (86) (109) (122) (131) EPS growth % na na na na 47%

EBIT $m 24 (13) (33) 70 107 PER x 40.3x na na 10.6x 7.2x

Net interest $m 0 (1) (2) (2) (1) DPS c/sh - - - - 2

PBT $m 25 (14) (36) 68 106 Franking % 0% 0% 0% 0% 0%

Tax (expense)/benefit $m (9) 13 9 (8) (17) Yield % 0.0% 0.0% 0.0% 0.0% 1.2%

Impairments/write-offs/other $m - - - - - FCF/share c/sh (20) (22) (18) 7 23

Reported NPAT $m 16 (1) (26) 60 89 FCF yield % -12% -14% -11% 4% 14%

Abnormal items $m - - - - - EV/EBITDA x 7.1x 8.2x 8.3x 3.2x 2.2x

Normalised NPAT $m 16 (1) (26) 60 89 PROFITABILITY RATIOS

EBITDA margin % 26% 19% 16% 33% 35%

PROFIT AND LOSS (INTERIM) EBIT margin % 8% -4% -7% 12% 16%

Half year ending Unit Jun-17a Dec-17a Jun-18a Dec-18a Jun-19e Return on assets % 3% 0% -4% 8% 11%

Revenue $m 109 219 152 233 229 Return on equity % 5% 0% -6% 13% 16%

Expense $m (88) (174) (130) (200) (184) LIQUIDITY & LEVERAGE

EBITDA $m 20 45 22 32 44 Net debt / (cash) $m (57) (43) (1) (28) (117)

Depreciation $m (14) (45) (41) (56) (54) ND / E % nc nc nc nc nc

EBIT $m 7 0 (18) (23) (10) ND / (ND + E) % nc nc nc nc nc

Net interest expense $m 1 (1) (0) (2) (1)

PBT $m 7 (1) (19) (25) (10) ASSUMPTIONS - Prices

Tax (expense)/benefit $m (4) (2) 15 7 2 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e LT real

Impairments/write-offs/other $m - - - - - Gold - Spot US$/oz 1,259 1,300 1,273 1,400 1,450

NPAT (reported) $m 3 (2) 0 (18) (8) - Hedging at year end (including pre-pay) koz 125 204 206 70 na

Abnormal items $m - - - - - - Average Price A$/oz 1,653 1,717 1,811 1,825 na

NPAT (adjusted) $m 3 (2) 0 (18) (8) - Average Realised Price A$/oz 1,522 1,661 1,570 1,822 1,933

CURRENCY

CASH FLOW USD/AUD US$/A$ 0.75 0.78 0.72 0.75 0.75

Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e

OPERATING CASHFLOW ASSUMPTIONS - Production (equity share)

Receipts $m 415 409 458 582 642 Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e

Payments $m (340) (392) (431) (402) (449) Gold Division koz

Tax $m - (2) (0) - - Gold production - Meekatharra (MGO) koz 101 112 99 135 154

Net interest $m 0 (1) 3 (2) (1) - Cue (CGO) koz 9 69 102 118

Other $m 1 1 4 2 - - Fortnum (FGO) koz 2 42 60 70 71

Operating cash flow $m 76 15 33 180 191 - Higginsville (HGO) koz 85 56 31

INVESTING CASHFLOW - South Kalgoorlie (SKO) koz 79 34

Capex and exploration $m (135) (172) (154) (146) (99) - Total koz 267 253 260 307 343

Other $m (1) 75 50 (6) (3) All in sustaining costs - MGO A$/oz 1,290 1,503 1,387 1,180 1,213

Investing cash flow $m (136) (97) (103) (152) (102) - CGO A$/oz 1,623 1,455 1,345 1,252

FINANCING CASHFLOW - FGO A$/oz 60 1,392 1,235 1,086 1,183

Net equity proceeds $m (4) 70 22 - - - HGO A$/oz 1,244 1,581 1,653

Debt proceeds/(repayments) $m 35 (18) (11) - - - SKO A$/oz 1,244 1,237

Dividends $m - - - - - - Total A$/oz 1,252 1,470 1,402 1,213 1,220

Other $m 96 36 21 - -

Financing cash flow $m 127 88 32 - - SUBSTANTIAL & SIGNIFICANT SHAREHOLDERS

Change in cash $m 67 6 (37) 28 89 Shareholder M Shares Interest

Ruffer LLP 37.3 9.6%

BALANCE SHEET Golden Energy and Resources Limited 36.0 9.3%

Year ending 30 Jun Unit 2017a 2018a 2019e 2020e 2021e BlackRock Group 23.8 6.1%

ASSETS Paradice Investment Management Pty Ltd 23.0 5.9%

Cash & short term investments $m 67 73 36 64 153 Directors and management 32.2 8.3%

Accounts receivable $m 9 20 22 24 26 Totals 152.3 39.1%

Inventory $m 48 61 68 68 68

Mine development and PPE $m 229 357 369 378 366 VALUATION

Exploration & evaluation $m 163 147 159 169 178 Issued capital Unit

Other $m 3 9 9 9 9 Ordinary shares m 389.1

Total assets $m 518 667 663 711 800 Listed options m 61.8

LIABILITIES Unlisted employee options m 17.0

Accounts payable $m 73 85 70 75 76 Total Issued Securities m 467.9

Borrowings $m 10 31 35 35 35 Current + 12 months + 24 months

Other $m 134 146 154 138 137 Sum of parts valuation $m $/sh1 $m $/sh1 $m $/sh1

Total liabilities $m 218 261 260 248 248 Meekatharra Gold Operations 383 0.98 413 1.06 370 0.95

SHAREHOLDER'S EQUITY Cue Gold Operations 170 0.44 240 0.61 268 0.69

Share capital $m 174 277 299 299 299 Fortnum Gold Operations 95 0.24 68 0.17 66 0.17

Reserves $m 190 195 196 196 196 Other mineral,mining and investment interests 79 0.20 79 0.20 79 0.20

Retained earnings $m (65) (66) (92) (32) 57 Total Mineral Assets 727 1.86 800 2.05 784 2.00

Non-controlling interest $m - - - - - Corporate (40) (0.10) (36) (0.09) (32) (0.08)

Total equity $m 300 406 403 463 552 Enterprise value 687 1.76 764 1.95 751 1.92

Net cash / (debt)2 15 0.04 1 0.00 28 0.07

Weighted average shares m 305 368 389 389 389 Equity value 702 1.79 764 1.95 780 1.99

Notes. 1. Based on diluted capital of 391.1m; may not add due to rounding

2. Excludes cash from exercise of options where exercise is not dilutive at the above valuations


Recommendation structure

Buy: Expect >15% total return on a

12 month view. For stocks regarded

as ‘Speculative’ a return of >30% is

expected.

Hold: Expect total return between -5%

and 15% on a 12 month view

Sell: Expect <-5% total return on a

12 month view

Speculative Investments are either start-up

enterprises with nil or only prospective

operations or recently commenced

operations with only forecast cash flows, or

companies that have commenced

operations or have been in operation for

some time but have only forecast cash

flows and/or a stressed balance sheet.

Such investments may carry an

exceptionally high level of capital risk and

volatility of returns.

Research Team

Staff Member

TS Lim

Industrials

James Filius

Sam Haddad

Alex McLean

Chris Savage

Jonathan Snape

Damien Williamson

Healthcare/Biotech

John Hester

Tanushree Jain

Financials

TS Lim

Lafitani Sotiriou

Resources

Peter Arden

David Coates

Stuart Howe

Title/Sector

Head of Research

Industrials

Industrials

Industrials

Industrials

Industrials

Industrials

Healthcare

Healthcare/Biotech

Banks/Regionals

Diversified Financials/Fintech

Resources

Resources

Resources

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Bell Potter Securities Limited, its employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document (which its representatives may directly share) and may from time to time hold interests in the securities referred to in this document.

Disclosure: Bell Potter Securities acted as Lead Manager to Pantoro Limited’s (PNR) $15m equity raise of September 2018 and $43m equity raise of May 2019 and received fees for that service.

Disclosure: Bell Potter Securities acted as Lead Manager to Breaker Resources (BRB) $10.5m equity raise in October 2018 and $6.4m equity raise of May 2019 and received fees for that service.

Disclosure: Bell Potter Securities acted as Lead Manager to Millennium Minerals (MOY) $15m equity raise in February 2019 and received fees for that service.

Disclosure: Bell Potter Securities acted as Lead Manager to Xanadu Mines (XAM) $10m equity raise in June 2018 and received fees for that service.

ANALYST CERTIFICATION Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. The Analysts hold long positions in shares in EVN, NST, OGC, RRL, SBM, RSG, BSR, GOR, PNR WGX, S2R, and SLR.

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