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Gold Company's 2019 Guidance 'Showcases Transformative Year'
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A CIBC report reviewed its projected 2019 production and cost estimates and the miner's own projections for the year.

In a Jan. 22 research note, analyst Cosmos Chiu reported that Alacer Gold Corp.'s (ASR:TSX: AQG:ASX) 2019 consolidated production guidance is "well above" CIBC's expectations and "represents a doubling" of the company's 2018 production.

Specifically, Alacer guided to consolidated production of 320,000–380,000 ounces (320–380 Koz), higher than CIBC's previous forecast of 273 Koz and Alacer's 2018 output of 171 Koz. The difference is due to Alacer expecting more growth than CIBC in the oxide and sulphide operations at Çöpler.

However, since Alacer released its guidance, CIBC expects the gold mining company to produce a total of 325 Koz at an all-in sustaining cost (AISC) of $722 per ounce ($722/oz) and generate as much as $100 million in free cash flow in 2019.

Breaking down 2019 production guidance by facility, Alacer projects oxide plant output of 90–110 Koz at an AISC of $700–750/oz, versus CIBC's projected 74 Koz at $792/oz.

Production guidance for the sulphide plant is 230–270 Koz at a grade of 4.75 grams per ton (4.75 g/t) gold and an AISC of $600–650/oz. In comparison, CIBC originally estimated gold production there of 199 Koz at a grade of 4.5 g/t and an AISC of $471/oz but has since increased its projection to 234 Koz at an AISC of $618/oz. Alacer is expected to reach commercial production at this facility in Q1/19 and ramp it up throughout the year, aiming to reach 55% of the facility's targeted production in H2/19.

As for the difference between Alacer's 2019 cost guidance and CIBC's projected costs for the year, Alacer included a higher sustaining capex figure of $40 million, versus CIBC's $30 million. Alacer also incorporated an additional $40 million for development capex for its sulphide plant and Gediktepe project, along with another $14 million for exploration.

Upcoming catalysts for Alacer are the announcement of commercial production at the Çöpler sulfide plant, expected in Q1/19. Also, completion of two feasibility studies is anticipated this year, one for the Gediktepe project and another for a possible expansion of the Çöpler oxide facilities.

CIBC has an Outperformer rating and a CA$4 per share price target on Alacer Gold. Its stock is currently trading at around CA$3.19 per share.


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Disclosures from CIBC, Alacer Gold Corp., Earnings Update, January 22, 2019

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Alacer Gold Corp. (ASR)

· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Alacer Gold Corp. in the next 3 months.

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