•Continuing to ramp up Degrussa. Recoveries are the most important figure during ramp up and previous company guidance has indicated will be ~80% in June qtr as transitional ore feeds the mill with underground mining ramping up.
•Likely that Degrussa will achieve 1.5Mtpa (375kt/qtr) nameplate design in Sept Qtr.
•Not expecting any downgrade to FY13 production from current 65kt Cu and 44koz Au.
•Maybe an update on cash cost guidance to incorporate lower gold prices. Current guidance is US$1.15-1.25/lb.
•Share price has gained marginally ~2% since start of April
•FY14 EV/EBITDA of 4x (consensus)
•Conclusion – PREFERRED LARGE-CAP EXPOSURE OF THE BIG 3. Future quarterlies should show ongoing improvement as the ramp up is complete and recoveries increase. Least leveraged to the gold price and will benefit from the lowering AUD. Potential for commencement of dividend payments once Degrussa commissioning complete. Exploration success is further upside. Potential risk is OZL buying Northparkes and needing to offload 19.9% stake in SFR on-market.
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