Two AMI (Aurelia Metals Ltd, -5.0% to 57.5cps, m.cap A$521m,...

	Two
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2	AMI (Aurelia Metals Ltd, -5.0% to 57.5cps, m.cap A$521m, Gold: Producer): Mike Millikan We have released an updated research note on AMI. AMI has decided to place development studies on its 95%-owned Nymagee Cu-Pb-Zn Project on hold, following disappointing metallurgical testwork results. In addition, the capital costs for the Peak Pb-Zn plant upgrade, currently underway, have been previously under-estimated and have now been increased to ~A$53M (up 51% from A$35M). While the latest updates to both Hera and Peak are unfortunate, it has little near-term impact on the operations. Group gold production and cost guidance for FY19 of 115-130koz at an ASIC of A$900-1,000/oz, remains unchanged, and the Peak Pb-Zn circuit is still expected to be completed in the MarQ’20. Drilling success at Hera outside current reserves and inventories, along with lower site costs is expected to extend mine life, we continue to anticipate that the Hera mine will operate well beyond 2023 - reserves and resources for Hera and Peak are due in early SepQ’19. We continue to see near and longer-term value but move to aSpeculative Buyrecommendation (from Buy) during this period of leadership transition. Our latest AMI NAV is 80cps (from 92cps), spot NAV of 84cps (P/NAV spot 0.7x) and our Price Target is 82cps (down from 97cps).

The latest Hartley view from 6th June