Post by
Ridgeback on May 15, 2024 7:59am
TD UPDATE
Flash Note.
CXB Target raised to $3.00
THE TD COWEN INSIGHT Q1 earnings were below estimates due to higher costs (production was previously released). That being said, the company is expecting higher production (and lower costs) in H2, and guidance remains unchanged. The update on the Valentine development was largely as expected, with minor scope changes bringing capital cost expectations ~5% above our estimate, and timeline unchanged with Q2/25 startup.
Impact: SLIGHTLY NEGATIVE Q4 adjusted EPS of $0.01 was below our estimate and consensus of $0.03. CFPS was $0.03, including the $40mm prepay, compared to our estimate of $0.06. The miss was due to higher operating costs. Production of 62k oz was previously released.
Total cash costs: Total cash costs (including royalties) were $1,337/oz, above our estimate of $1,143/oz. Costs in Nicaragua were 21% higher than we expected due to higher waste stripping. 8,927kt of waste were mined during the quarter, 31% higher than the 2023 quarterly average.
Valentine Project update; capex increase largely in line. Calibre estimates initial capex for Valentine of C$652mm, ~5% above our estimate of $620mm. This represents a C $145mm increase from the last estimate provided by Marathon (Figure 2). C$70mm of the increase was due to cost underestimation which became clear as Calibre advanced engineering to 98% complete (from 60%). The company also pulled forward C$35mm of capex from Phase 2 (in 2028), which approximately accounts for the delta vs. our estimate. As of April 30, C$374mm has been spent, with C$279mm require to complete the project. The project remains on track for first production in Q2/25.
Balance sheet - fully funded: Following quarter end, Calibre closed its C$115mm equity financing and received $20mm from its gold prepay agreement. The company held ~C $400mm of cash and restricted cash (inc. $144mm of cash) as of April 30). Importantly, the company drew down $25mm of restricted cash (Sprott debt) in April which implies the company provided evidence it was fully funded to complete Valentine.
Guidance unchanged: Calibre is guiding to 275-300koz of gold production at total cash costs of $1,075-$1,175/oz in 2024. Q1 production represents 21% of the annual guidance midpoint, with production weighted H2/Q4
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My comment. Increased costs are a fact of life today and keep in mind they are going from the intial 2 metric tons to 4 in the processing. On track well managed.
Conference call 10 Am today.