Jun-21 - Quarterly Summary

Afternoon all. I've summarised below the gold producers summary for Jun-21 quarter. My objective is to spark some constructive discussion re. the relative performance and merits. I have other data available (e.g. at individual mine level) - please shout with any queries. Also - please call out any errors in the data. Charts include:

1. Production (incl. production v. guidance)
2. AISC (incl. AISC v. guidance)
3. Production and AISC
4. Production and margin
5. Cash and net cash
6. Net cash change from Mar-21 quarter
7. Hedging position

1. Production (incl. production v. guidance)

• Two new producers included this quarter: OBM (Davyhurst commissioned and producing last quarter, but I missed it from the Mar-21 report) and CMM (newly commissioned Karlawinda)
• 2.46m oz produced in the quarter (up 28% v. Mar-21 quarter (1.92m)); Q4 for many producers – often a big month as companies strive for strong year-end performance
• NCM still the top producer at 542koz, but NST improved dramatically c. Mar-21 quarter (increase of 85koz, 23% uplift)
• Guidance increases in the quarter: EVN (up 1%)
• Guidance decreases in the quarter: RED (down 8%), RSG (down 10%), WGX (down 13%), SBM (withdrew guidance)
• Over-achieving guidance: PRU (103% of mid-point), MML (103%), ALK (108%), BLK / WMC (101%), OBM (103%)
• Missing guidance: EVN (97% of mid-point YTD), WAF (Q2; 45% of mid-point; guidance narrative noted ramping up in CY2021), RMS (98% of mid-point), DCN (95%), TRY (64%)
• The % figures compare production YTD v. the midpoint of each organisation's guidance range

2. AISC (incl. AISC v. guidance)

• Average AISC in quarter = A$1,661 (Mar-21 quarter = A$1,555; an increase of 7%)
• Weighted average AISC in quarter = A$1,333 (Mar-21 quarter = A$1,400; a decrease of 5%)
• Only 5 producers under the weighted average – KLA, NCM, WAF, EVN and RMS
• No AISC guidance data for NCM, SBM (withdrawn in quarter), CMM, KAU and KRM.
• Guidance decreases in quarter: EVN (down 5%)
• Guidance increases in quarter: RED (up 2%), RSG (up 7%), OGC (up 9%), WGX (up 1%), SBM (withdrew guidance)
• Over-achieving guidance: RSG (95% of mid-point), WGX (94%), AMI (97%), MML (95%), AIS (96%), ALK (90%), BLK / WMC (90%), OBM (95%)
• Missing guidance: RRL (109%), WAF (145%; Q2; guidance narrative noted likelihood for this to drop in H2), GOR (117%; Q2), DCN (106%), TRY (140%)
• The % figures compare production YTD v. the midpoint of each organisation's guidance range

3. Production and AISC

• Mid-tier producers struggling with cost management (several have called out staff costs)
• Variability at the low end

4. Production and Margin

• NCM and KLA throwing off some fantastic results – very high production, low AISC, good sell price, excellent margin. See Net Cash chart below showing delta position v. Mar-21
• Average gold sales price in the quarter was surprisingly varied:
• GOR – A$2,145 (big hedges at low price)
• NST – A$2,179
• PNR – A$2,524
• BLK / WMC – A$2,651

5. Cash and Net Cash

• KLA has a staggering A$1.15m net cash position. Wouldn’t be surprised to see them use it for M&A (they currently have 3 producing mine centres).
• SLR still have huge reserves, and still coming under pressure to use them.

6. Net Cash Change from Mar-21 Quarter

• NST added a cool A$126m to their net cash position. SAR merger seems to have settled very quickly – could they be building towards their next acquisition?
• SLR grew their net cash position slightly in the quarter (by A$10m to A$330m).
• EVN – significant drop resulting from the Battle North acquisition.
• OGC – not immediately clear why.
• CMM – completion of construction and commissioning

7. Hedging

• Usual caveat - I don't believe that there is a good or bad position re. hedging. It is what it is, and the hedge v. market position will determine whether it helps an organisation's result, or it doesn't (RRL's hedge at A$1,571 meant it had the lowest average sales price in the quarter (A$2,014)).
• RRL has almost 400% of Mar-21 production in their hedge book at an average price of A$1,621.

Closing
As noted in the intro - I am really keen to get some constructive conversation going re. the quarter. I have a stack of other data available if anyone has any queries. And as always, please do flag any errors, etc.
I have some views that attempt to look at valuation (EV) v. these quarterly results (e.g. who is the best value re. margin, who is the best value re. production scale, etc.). Happy to share if folks think they would be useful.
Disclosure: I hold the following stocks relevant to this thread: BGL, CMM, DEG, GOR, NST, SBM, SLR and WAF. And as always, please DYOR.