Author: RCFS Web
May 13, 2022 Platinum Group Metals Ltd. (TSX:PTM, BUY, C$8.15 target, David A. Talbot) has signed an MoU with JOGMEC (Private) to advance its Waterberg
May 13, 2022 Canada Nickel Company Inc. (TSXV:CNC, BUY, C$4.45 target, Timothy Lee) announced that it had submitted the preliminary draft of the Initial Project
Q1/22 operating and financial results saw adj. earnings of $1.1M (-$7M YoY) or $0.01/sh (-$0.05/sh YoY), missing both consensus and RCS EPS estimates of $0.08 and $0.14, respectively. EPS was impacted by lower production and higher COVID related operating costs. While revenue remained strong, management highlighted that the cost pressures are temporary, should stabilize in Q2/22, while trending lower in H2/22. The scale of cost increases was a surprise to us, but it should be viewed as temporary. Management had warned of temporary cost pressures and adjusted 2022 guidance lower earlier which remains unchanged, helping to set expectations. Investors should focus on the many other highlights that outline KRR’s growth expectations. Expansions remain on track to double production by 2024 and we expect the market to focus on this long-term. That said, KRR has outperformed peers in 2022 and could see a correction on this news. We believe covid related costs to be mostly gone, and plan to refine our DCF model once the Beta Hunt PEA is available.
Aris Gold released Q1/22 production and financial results. Although production missed our estimates, we anticipate gold production to increase in H2/22 from the Upper Mine as mining sequences into higher grade areas and processing rates increase. We note that in Q1/22, the company had already begun mining higher grade material than in previous quarters (3.20 g/t Au vs. an average of 2.76 g/t Au in 2021). We anticipate steady production improvements at Marmato through 2022 following recent optimization and cost reduction work, and we maintain our view that Marmato has the potential to generate significant free cash flow by 2024 once the Lower Mine comes online.