Goldplat (LON:GDP) has released strong production numbers for Q3 FY 2016, producing 7,252oz of gold which brings nine month production to 24,709koz. This implies some potential upside to our full year production estimate of 31,500oz. The strong run rate has benefitted from the normalisation of operations in Ghana with the backlog now resolved. Also an increase in concentrates sent to Rand Refinery for processing reduced turnaround times while the Aurubis refinery in Germany continues to process the balance of carbons and ashes.
A significant new contract was signed with Anglogold Ashanti (ANG SJ). GDP will now process by-product material from the Geita mine in Tanzania which produced 527koz Au in 2015.
In Ghana, the commissioning of the shotblast facility was completed; however, the installation of the new elution column has been put on hold whilst the turnaround at Kilimapesa is prioritised. Further progress has been made on using Ghana as a hub for processing South American by-product material.
Meanwhile, in Kenya the low rate of production along the high grade Teng Teng reef continues alongside the processing of artisanal tailings. However, the EIA has now been approved for an expanded CIL plant. Resolving the bottleneck at Kilimapesa is now GDP’s priority and we believe that stemming losses and returning the asset to profitability will unlock significant additional value.
We reiterate our Buy recommendation and target price of 7.1p/sh.
BHP Billiton (LON:BLT) has released disappointing production results for FY Q3 2016. Production across all major commodities is down versus 9mo15. Petroleum production of 184.1mmboe YTD was down 4% YoY. Copper production of 1.2mt YTD was down 8% YoY although quarterly production at Escondida of 260kt was up strongly 18% QoQ albeit 23% lower YoY as higher throughput offset continuing grade weakness. Guidance for copper production is unchanged.
YTD iron ore production of 171mt was down marginally by 1% YoY although quarterly production of 53mt was down 7% QoQ and 10% YoY. The full impact of the Samarco closure was felt in the quarter which offset stronger performance at the Australian operations. Iron ore guidance was cut by 3% to 229mt for the full year.
Met coal production YTD of 31mt was down 1% YoY while guidance remains unchanged at 40mt for the full year. Thermal coal production YTD of 27mt was down 10% YoY following operational disruptions from heavy rainfall although full year guidance remains unchanged at 37mt.
Production results for Q1 show 51koz gold and 3.7moz silver with Inmaculada mine contributing 34koz of the gold total. This represents a 79% YoY increase in silver equivalent production to 7.9moz. HOC reports that they remain on course to achieve AISC of production for the year in the US$12-US$12.50/AgEqoz range. The realized price received for gold was slightly up at US$12.66/oz while silver price received was down by US$1.40/oz to US$16.20/oz offset in part by forward agreed prices. The current cash position is now $105m. Pallancata mine production was down by one third YoY to 0.84moz according to mine plan while HOC transitions production stopes to the new Pablo vein towards the end of the year.
The company has entered into new hedge positions equivalent to 10% of 2016 silver forecast output and a further 15kozs of gold at current prices, locking in higher prices than earlier hedges.
We can see improved cashflow feeding through the operations as a result of higher gold prices in particular. We expect adjustments to hedge positions to benefit HOC.