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Beadell Resources (BDR) - Less is More

Created on Thursday, 09 April 2015 08:27

Beadell Resources (BDR) released an updated Reserve statement for Tucano. As anticipated (see Argonaut note “Real Benefits” dated 18th March), overall inventory fell from 1.7Moz to 1.3Moz, reflecting the removal of deeper ounces and iron ore by-product credits. The updated Reserve is more robust, featuring a conservative gold price assumption of US$1,050/oz (was US$1,200/oz), a lower strip ratio (6.0:1, v 10.3:1), and increased certainty related to the removal of iron ore credits. The Company is expected to benefit from a depreciating Brazilian Real and a transition to contract mining by Maca (MLD). However, Argonaut notes BDR’s CY15 production profile is weighted towards H2. CY15 sales guidance of 170-190koz was maintained. This updated guidance is softer than anticipated, incorporating ~20koz from Duckhead. Factoring in a shorter mine life and softer than anticipated CY15 guidance, we reduce our valuation to $0.38 (was $0.45). Speculative Buy recommendation maintained.
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