Euroz Hartleys Research Report 15 February 2021
https://www.emeraldresources.com.au/sites/default/files/research_reports/Euroz_Hartleys_EMR%20%240.825%20Buy.pdf
AnalystDatePrice Targety 4th February 2021$1.05/sh from $0.85/sh
Emerald has maintained its guidance for first gold from the Okvau Gold Project in Cambodia in Q2CY21.yDevelopment activities at Okvau continues to advance well, with key equipment delivery on schedule (+75% of all gear on site, 15% in transit and <10% to be shipped), plant site concrete works continuing (SAG mill base poured late DecQ), crushing area foundations progressed and tank (CIL and detox) assembly underway.yThe Okvau village is largely complete, and grid power connection is expected to be completed in the MarQ, planned to coincide with execution of the power supply agreement.yMining fleet equipment from contractor MACA has ramped-up, with the tailings storage facility (TSF) clearing and construction started; and open pit mining commenced late in the DecQ.yThe Company spent ~A$24m on the mine development in the DecQ with ~A$44m FY21 ytd. The total project development expenditure is tracking well to plan with ~70% of the budget (~US$98m) spent and committed at the end of the quarter. This implies that current cash (~A$77m) can fully cover the construction balance, with a healthy buffer in place for both the restricted cash requirements
Less than 5 months to first gold at Okvau Investment caseEmerald Resources (EMR) remains on track for first gold in Q2CY’21, with the recent latest Okvau construction update highlighting good progress. Equipment deliveries to site are running to plan and open pit mining has commenced. The project development remains “on time and on budget” with 70% of the total construction costs now spent and committed, implying ~US$29m (~A$39m) left to spend. Cash at DecQ end was ~A$77m, with debt of ~A$82m (Net Debt ~A$5m), so well-funded to complete the build, with contingency available, if so required. However, it should be noted, that the Company boasts a strong management team that has a track record of delivering gold project developments ahead of time and under budget, and the Okvau construction appears to be no exception. EMR has traded well since late Nov’20 (up over 40%), but we expect it to be re-rated further as it nears his production milestone. We have lifted our price target to $1.05/sh (up from 85cps), adjusted by a DCF roll-forward, minor production changes and our gold price assumptions. Buy maintained.
Key points On track for first gold Q2CY21y Emerald has maintained its guidance for first gold from the Okvau yEmerald has maintained its guidance for first gold from the Okvau Gold Project in Cambodia in Q2CY21.yDevelopment activities at Okvau continues to advance well, with key equipment delivery on schedule (+75% of all gear on site, 15% in transit and <10% to be shipped), plant site concrete works continuing (SAG mill base poured late DecQ), crushing area foundations progressed and tank (CIL and detox) assembly underway.yThe Okvau village is largely complete, and grid power connection is expected to be completed in the MarQ, planned to coincide with execution of the power supply agreement.yMining fleet equipment from contractor MACA has ramped-up, with the tailings storage facility (TSF) clearing and construction started; and open pit mining commenced late in the DecQ.yThe Company spent ~A$24m on the mine development in the DecQ with ~A$44m FY21 ytd. The total project development expenditure is tracking well to plan with ~70% of the budget (~US$98m) spent and committed at the end of the quarter. This implies that current cash (~A$77m) can fully cover the construction balance, with a healthy buffer in place for both the restricted cash requirements.
Euroz Hartleys Research Report
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