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The first quarter of Rambler Metals & Mining’s (LON:RMM, CVE:RAB) fiscal year has left the group well placed to hit its full-year targets.
The copper and gold producer, which operates in Newfoundland and Labrador, Canada, racked up record production of copper concentrate in the three months to the end of October, churning out 6,591 tonnes of copper concentrate, up 26% year-on-year (YOY).
Head grades and recoveries for copper and silver remained above the company’s planned targets, Rambler revealed. The copper head grade was 3.71%, down from 4.05% in the preceding quarter but up on the two quarters before that. The quarterly comparison was similar for silver, where the latest head grade of 9.22 grams per tonne (g/t) was down quarter-on-quarter but higher than in the prior two quarters.
The gold head grade improved to 1.64 g/t from 1.52 g/t in the preceding quarter. The gold recovery rate, however, eased to 62% from 65% in the preceding quarter.
The copper recovery rate climbed to 96% from 94% in the previous quarter while silver recovery improved to 76% from 73%.
Dry tonnes milled hit a record level of 55,659 tonnes, up 18% on a year earlier. The firm milled 1,956 tonnes of copper (+26% YOY), 1,655 ounces of gold (+28%) and 11,870 ounces of silver (+20%).
For the first full 12 months in commercial production the company milled 193,056 dry metric tonnes and produced 20,393 tonnes of copper concentrate with 5,909 tonnes of copper metal, 4,792 ounces of gold and 35,828 ounces of silver.
The average feed grade during this period was 3.63% copper, 1.41 grams per tonne gold and 9.03 grams per tonne silver followed by a mill recovery of 93%, 62% and 72% for copper, gold and silver respectively.
"We are again very pleased to see record tonnage and metal produced while head grades and recoveries for copper and silver remained above planned targets. We now believe that the copper circuit is running at optimal performance levels allowing time for further analysis into precious metal recovery,” said Robert Maguire, Rambler’s general manager.
Cantor Fitzgerald said Rambler had maintained its record of increasing quarter-on-quarter production of all metals.
“With copper dominating the operation's revenue generation, the average head grade achieved 3.63% and the recovery rate of 93% must be viewed as encouraging as the operation matures. Based on the 1Q results, the company is maintaining its full year guidance of 20kt-24kt of concentrate containing 5.7kt-6.84kt copper, 4.5koz-5.5koz gold and 32koz-39koz silver. A further 2.5koz-3.5koz gold production is forecast from the hydromet circuit,” Cantor analyst Asa Bridle said.
“With the copper circuit now performing very well, the company has the opportunity to concentrate on evaluating precious metal recoveries (62% and 76% for gold and silver respectively) in 1Q14 to see if improvements can be made. Though precious metal prices remain subdued, any additional oz produced can make a useful contribution to lowering copper production costs,” Bridle added.
Ahead of the quarterly results next month, the broker is sticking with its full-year earnings forecasts, and says the company’s consistent performance ought to be recognised through a re-rating.
Cantor Fitzgerald rates the shares a ‘buy’ and has a target price of 47p. Rambler shares were up 3% at 28.06p in late morning trade in London.
Charlie Long, at Sanlam Securities, was also upbeat. “Although this is a fairly complicated story and the Ming Mine and development projects are quite small, Rambler is now generating quite significant operating cash flows and is strategically well placed to grow. Perhaps the greatest risk is overspending on development projects that ultimately might not prove feasible,” Long said.