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Gold Miner Achieves 'Strong' Q2/19 Results, Increases Oxide Guidance
Research Report

Source:

Production, costs, guidance and financials of this miner are reviewed in this CIBC report.

Gold bars

In a July 30 research note, CIBC analyst Cosmos Chiu reported that Alacer Gold Corp.'s (ASR:TSX; ALACF:OTMKTS; AQG:ASX) "Q2/19 results included solid production and better-than-expected sales that drove an earnings per share beat."

Chiu reviewed Alacer's production and related cost during Q2/19. The company produced 99,500 ounces (99.5 Koz), above CIBC's forecasted 98.1 Koz. The all-in sustaining cost (AISC) was also better than expected, coming in at $669 per ounce versus CIBC's $743 per ounce estimate.

Production for all of H1/19 totaled 95 Koz, on the lower end of full-year guidance of 90–110 Koz. Consequently, Alacer increased oxide production guidance for the year to 125–145 Koz at an AISC of $650–700 per ounce, down from previous cost guidance of $700–750 an ounce.

The Çöpler sulfide oxide plant, currently being ramped up, outperformed in Q2/19, delivering 57 Koz, a 53% quarter-over-quarter increase.

Year-to-date production at Çöpler was 94 Koz, against full-year 2019 guidance of 230–270 Koz. The plant remains on track to meet the lower end of that range. "We currently model 229 Koz production from the sulfides in 2019, at an AISC of $622 per ounce," Chiu commented.

As for Alacer's Q2/19 financials, Chiu noted, adjusted EPS of $0.08 exceeded CIBC's $0.04 forecast and consensus' $0.03 projection, primarily due to higher-than-expected sales from the Çöpler sulfide plant.

Cash flow per share also was a beat at $0.13 versus CIBC and consensus' $0.11 estimate.

At the end of Q2/19, Alacer had $125 million in cash, including restricted cash, and net debt of about $180 million. CIBC estimates that Alacer's free cash flow in 2019 will surpass $150 million, based on the current gold price of $1,425 per ounce.

Finally, Chiu presented potential upcoming key catalysts. They include continued ramp-up of Çöpler, exploration results from the Çöpler complex and engineering study results regarding the addition of a stand-alone leach pad at Çöpler or a significant expansion of the existing one.

CIBC has an Outperformer rating and a CA$6 per share target price on Alacer Gold, whose stock is currently trading at around CA$5.21 per share.

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Disclosures from CIBC, Alacer Gold Corp., Earnings Update, July 30, 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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