In a Sept. 1 research note, Edison Investment Research analyst Alison Turner reported that Kopy Goldfields AB (KOPY:ST) posted "a competent set of H1/21 results" despite a challenging start to 2021, and growth remains on track for full-year 2021 and longer term. Kopy is a Sweden-based company with hard-rock and placer mining operations in Russia.
Turner reviewed Kopy's H1/21 results. Production was down 14% in the year's first half as the company dealt in Q1/21 with a COVID-19 outbreak at Yubileyniy, one of its producing mines. Total H1/21 production from all of its operations was 20,700 ounces (20.7 Koz) of gold equivalent, down from 24.1 Koz in H1/20.
In Q2/21, Kopy also experienced some concentrate transportation delays due to inclement weather. However, it managed to ramp production up 69% and produce a total 13 Koz.
Despite these adverse events, Kopy's H1/21 EBITDA was US$14 million (US$14M), lower than its US$17.8M EBITDA a year earlier, due to decreased gold sales. The company's H1/21 EBITDA margin also fell short at 38% versus 40% in H1/20. Turner noted that Kopy tamped down costs such that they were lower year over year, at US$859 per ounce compared to US$861.
At the end of H1/21, Kopy had US$0.9M in cash, US$13.9M in available undrawn facilities, and 5.25 Koz of sellable gold. Net debt was US$59.6M.
Turner noted that Kopy's capital investment program "remains on track and is fully funded by existing debt facilities." The three major projects underway are the addition of a second flotation line at Yubileyniy (commissioning slated for early Q4/21), a new heap leach at Perevalnoe (commissioning expected by year-end 2021), and a new mine at Malyutka (expected to come online in 2023).
The analyst highlighted that Kopy maintained its full-year 2021 production guidance of 56 to 59 Koz and cited reasons why the company most likely will achieve. They include the additional production expected this year and Kopy's built-up gold inventory.
"We now forecast 2021 gold equivalent production of 56 Koz, at the lower end of the guidance range (previously we forecast 59 Koz) and gold equivalent sales of 57 Koz (previous forecast 61 Koz)," wrote Turner.
The outlook for Kopy's production longer term is also positive, Turner noted. By 2025, the company aims to grow its yearly production to 100 Koz of gold. Further, exploration is continuing at Kopy's joint venture project, Krasny.
"With two of those three projects set to come online before the end of this year, the company should start to see greater recognition of the strength of its growth profile within the next year as the significant investment begins to flow through to production and cash flows," Turner wrote.
Kopy is currently trading at about SEK1.88 per share.
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Disclosures from Edison, Kopy Goldfields, September 1, 2021
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