Equigold is an ASX listed company that has established a track record of profitable gold production at its Australian operations, and is poised to embark on development of a significant new operation in Ivory Coast. This will lift the company’s gold production from the current level of around 150koz pa to in excess of 220koz pa from March 2008. Additionally it will enhance the average mine life of Equigold’s operations, elevating the company to the next tier in terms of investment relevance.
During the first half of FY07 Equigold produced 74.3koz gold at A$386/oz and generated a pre tax profit (and pre-hedging adjustment) of $14.4m. Hedging adjustment was $7.0m and net profit $15.2m. An interim dividend of 3.5cents was declared.
Management is forecasting that gold production for the second half of FY07 will be around 76koz at similar cash cost. Profit before tax and hedging adjustments for the second half is forecast in the range of $20 – $21m. This will vary depending on movements in the gold price.
Equigold has proven itself to be a solid junior gold explorer and producer in recent years. It now has the potential to move up the ranks of the Australian gold sector in terms of scale of gold production and average mine life through the development of Bonikro. However, this comes with an increased level of sovereign risk and on fiscal terms that are yet to be fully disclosed.
The company is currently trading in line with or at a slight discount to its peers based on its existing production performance. The potential development of Bonikro provides an opportunity to double earnings, placing Equigold at a significant discount to the sector.
EQI
equigold nl
