Ground Breakers: A big morning of quarterlies as Perseus slays, Dr Copper helps Evolution and Coronado sees strong met coal prices
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The mad rush to get quarterlies completed has begun, with a smorgasbord of production results for investors to wade through on Tuesday morning.
Coal, copper and gold were all up in investors’ eyeballs this morning, with Evolution Mining (ASX:EVN), Sandfire Resources (ASX:SFR), Coronado (ASX:CRN), Perseus Mining (ASX:PRU), Red 5 (ASX:RED) and 29Metals (ASX:29M) all on the bill.
Let’s start in the world of gold, where an ever so slight fall overnight to US$1927/oz tempered recent gains that have sent miners soaring in recent months.
The undisputed winner in this category in recent times has been West African miner Perseus, and it did not disappoint with yet another strong quarter from its Yaoure, Sissingue and Edikan mines in Cote d’Ivoire and Ghana.
PRU delivered 130,911oz at all in site costs of US$983/oz from its mines in the December quarter.
While weaker than a ripper September term, it did mean that the December half year came in ahead of guidance on both production and costs at 268,371oz of gold at US$930/oz against forecasts of 240-260,000oz at US$1000-1100/oz.
Its average gold price also lifted from US$1645/oz to US$1748/oz, with full year production of 521,211oz at US$941/oz, a stellar performance in a market categorised by a loss of cost control and operational disappointments.
PRU also confirmed it remained on track to deliver a possible final investment decision on its renamed Meyas Sand gold project in Sudan, 75km to the south of the Egyptian border, formerly known at the Block 14 project.
Meanwhile, Australian producer Evolution Mining (ASX:EVN) announced a 3% increase in gold production to 166,404oz after a few ordinary quarters, pulling all in sustaining costs down by 27% to $1099/oz and all in costs down 17% to $2085/oz.
That came off the back of record quarterly throughput at its flagship Cowal mine in New South Wales, where production rose 33% to 73,676oz at a 23% lower AISC of $1042/oz, while its Ernest Henry mine delivered $142m in mine cash flow before major capital on higher gold and copper prices as well as improved tonnage and grade.
EVN has maintained its guidance of 720,000oz for FY23 at $1240/oz, though it continues to see issues at its Red Lake, Mungari and Mt Rawdon operations.
At Red Lake in Canada the momentum of its turnaround stalled with dilution and workforce absenteeism, as costs lifted from $2266/oz to $2761/oz and gold produced fell from 36,140oz to 24,960oz QoQ in December, leaving mine cash flow before major capital at a $17.3m loss.
It had parachuted former Cadia head of operations and Mt Rawdon general manager Thomas Lethbridge into Canada to right the ship as head of the operations area, with a search for a Red Lake head ongoing and COO Bob Fulker sent to North America to keep the mine to plan.
What do they mean by absenteeism at Red Lake? Not vacancies, but folks up in Canada heading off on holidays it seems.
“It was around that start of the festive season, and also was around some periods in the local area where people tend to go away on vacation as well as some unplanned absenteeism. So we believe we have it under control now, it’s not to do with it’s not to do with vacancies or anything, it’s just about short term absenteeism,” Fulker told analysts and media on a call this morning.
On the positive side, EVN says a feasibility study has defined a “compelling commercial case” for expanding its Mungari processing plant in WA despite well documented issues with the cost of labour and materials which saw Ramelius Resources (ASX:RMS) dump an expansion of its Edna May gold mine yesterday.
Despite the generally positive tone of EVN’s results, their first with Laurie Conway and not Jake Klein on the blower, RBC analyst Alex Barkley described them as soft given the role copper credits played in its 18% cost beat against consensus.
“However, the AISC beat of ~A$180/oz was more than explained by A$230/oz better copper by-product credits,” Barkley said.
“The mixed Q2 result appears more favourable when considering industry wide labour, covid and cost pressures in the Q2.
“However, EVN has performed strongly recently; up ~60% since Oct 1st at the start of the quarter.”
Red 5, meanwhile, was up 4.2% after delivering 36,260oz of gold in its first quarter as a commercial producer at its King of the Hills gold mine. All in sustaining costs will be reported from the March quarter on.
Copper miners also emerged from the woodwork this morning, with 29Metals hitting its 2022 production guidance with 40,800t of copper and 57,600t of zinc produced.
Gold was near the top of guidance at 26,600oz, with silver above full year guidance at 1.55Moz.
That came to 73,400t on a copper equivalent basis, with Golden Grove’s zinc resource performing strongly in December at 22,000t, offsetting a fall in copper production QoQ from 12,300t to 8000t.
Costs were at the high end of guidance, the company said.
“Costs management generally remained positive, with the increase in site costs in line with activity, combined with the impact
of continuing inflationary pressures being felt across the sector. C1 Costs benefitted from strong by-product production and sales in the quarter, with reported unit costs adversely affected by lower copper sales for the period,” MD and CEO Peter Albert said.
“We continued to invest in our operations, with ongoing ventilation upgrades, successfully placing paste into stopes at
increasing depths after commissioning of the new paste fill plant at Golden Grove, and ongoing tailings storage facility
“From an organic growth perspective, important milestones during the quarter included release of the results of the Gossan
Valley studies and the Cervantes PFS. The outcomes of these studies provide further confidence regarding the long-term
outlook for Golden Grove. In addition, we continued our evaluation of the exciting cobalt opportunity at Capricorn Copper.
“Looking ahead to 2023, we are encouraged by the recent uplift in metal prices. The mid-to-long term outlook for copper
and zinc is incredibly positive. 29Metals is in the right space at the right time. Our guidance for 2023 is included in the
report released today and includes an outline of the key drivers for our performance in 2023 and beyond.”
Meanwhile, Sandfire saw copper production fall from 28,056t to 20,031t for the December quarter, with C1 costs up slightly from US$1.73/lb to US$1.77/lb.
Zinc output at the MATSA mine remained strong, up from 19535t to 19,755t, with total copper and zinc output for the half year of 48,088t and 39,290t respectively, lead production of 4,398t, gold at 12,777oz and silver at 1.3Moz.
Unit cost guidance for FY23 was revised from US$1.72/lb to US$1.74/lb, though lower European energy costs saw unit costs at its MATSA mine in Spain fall from US$2.19/lb to US$1.85/lb in the quarter.
“On other fronts, we continued to make outstanding progress at the Motheo Copper Mine in Botswana, with construction tracking ahead of schedule with wet commissioning imminent and first
ore into the Concentrator expected during the March Quarter, paving the way for the start of production early in the June 2023 Quarter,” acting CEO Jason Grace said.
“Given all the challenges being faced by construction projects around the world, including cost inflation, labour shortages, COVID and supply chain issues, this is a fantastic achievement – one that deserves to be celebrated. We look forward to reporting on further milestones from Motheo in the weeks and months ahead.”
The DeGrussa mine, where the opportunity to continue processing on oxide stockpiles has been extended to June, was put up fro sale during the quarter.
Where steelmaking coal miner Coronado announced record 2022 group revenue of US$3.57 billion, up 66.2% on 2021 numbers after coal producers enjoyed a bumper year.
Like other Australian coal miners CRN saw production lift in December after a wet September quarter.
ROM production rose 4.4% to 6.7Mt, with 2022 ROM output down 4.1% YoY to 25.3Mt, while saleable production rose 4.4% QoQ to 4.3Mt, with its 16Mt full year number some 7.2% down.
That was more than made up for by record prices, with its met coal selling out of the USA and Australia at an average price of US$265.8/t in 2022, up 92.6%.
Meanwhile, CRN said its Curragh met coal from Queensland was among the products sought after by China after thawing its ban on Australian coal products.
Outgoing managing director and CEO Gerry Spindler, who will move into a new role as executive chair at the miner’s AGM in May, said China’s re-entry to the market was supporting met coal prices and demand.
“Met Coal prices in January have improved further with the
PLV HCC FOB AUS price index above $300/t supported by restocking demand from Indian steelmakers as well as market expectations that China may recommence importing Australian coals,” he said.
“Given higher index prices in the December quarter and into January, combined with the commencement of Coronado’s FY23 North American annual contracts at an average price of $201/t (FOR), reflecting a price $14/t higher that FY22, Coronado anticipates Met Coal price realisations in the first quarter of 2023 to be higher than the fourth quarter.
“Throughout 2023, Coronado anticipates Met Coal prices to remain above historical averages due to the ongoing trade constraints for Russian coal and elevated Thermal coal demand and prices.”