citibank buy, page-5

A$0.82 looks too low to me.

Full year EPS looks as though it will be c. 30c so current trailing P/E is only 1.2x.

A$0.82 would still equate to a P/E of less than 3x.

For FY16 throughput should be considerably higher than FY15.

Grade is already far better than FY15 average of 5.6g/t.

Production looks on course to at least meet guidance, if not a bit higher at c. 136koz for FY16 against 98koz over FY15. But the SAG mill reline will have removed a bit of my forward estimate, so perhaps close to 130koz for the full year is more conservative.

D&A will be lower because of the US$259m impairment of historic expenditures - ie improved EPS.

6% devaluation of the PHP against the US$ since mid 2015 - and probably further to go - which reduces in-country costs relative to US$ revenue, particularly because they have quite a significant contract labour force.

Significant fall in oil price but doubtful that this will have necessarily positively impacted costs unless they have needed to run backup generators due to grid unreliability. I believe grid power is largely hydro and relatively uncorrelated with oil.

My forward estimate of Sales/share for FY16 is US$0.73 against US$0.57 for FY15.

Against the above positives is the lower average gold price of US$1,117/oz (so far) in FY16 against the average over FY15 of US$1,223/oz, although this is already included in the above Sales/Share figure.

Q2 operational performance and 1H16 financials will help to clarify the full year outlook. But I still think that the Citi valuation looks too low based on steady improvements that have been gained Q-on-Q over the last 18 months.

Just my opinion.
CPDLC