OTCPK:LGCUD - Post by User
Post by
hockeyguy123on May 16, 2014 2:29pm
288 Views
Post# 22571177
National BanK: Outperform and $1.80 target for Luna Gold
National BanK: Outperform and $1.80 target for Luna GoldAccording to National Bank Financial:
https://app.box.com/s/u96dn8vmod9sxlw8ueta
Luna Gold Corp.
Stock Rating: Outperform
(Unchanged)
Target: Cdn$1.80
(Unchanged)
Q1/14 Financial Results
Phase I Development On Track for H2/14 Despite Challenges in Q1/14
HIGHLIGHTS
- LGC Q1/14 financials beat on better than expected cash costs. Q1/14 adjusted EPS of US$0.04 with NBF/consensus of US$0.01/US$0.03. CFPS (before non-cash working capital changes) of US$0.06 beat NBF of US$0.04 but was in line with consensus of US$0.06. The beat on our estimates was reported cash costs of US$705/oz compared to our modeled US$772/oz as a result of a lower strip ratio and on-site G&A.
- All-in costs a positive surprise in Q1/14 – second quarter in a row. Q1/14 reported all-in sustaining costs were US$787/oz or US$956/oz (after adjusting for the impact of the 17% gold stream). We model an average all-in sustaining cash cost of US$1,000/oz for 2014 and long-term average of US$1,125/oz (after adjusting for the impact of the SSL stream at our US$1,400/oz long-term gold price assumption).
- Phase I expansion remains on budget while development progress slowed in Q1; we continue to model completion in H2/14. Phase I construction activities were impacted by local demonstrations against the government, heavy rains and awaiting approval from insurers to reconstruct a defective CIL tank. Despite these challenges, LGC continues to expect the expansion to be completed in H2/14 (in line with NBF Estimates). Detailed engineering is 98% complete and US$41 mln of the initial US$49.8 mln budget has been committed and/or spent at the end of Q1/14.
- Balance sheet sufficient for now – no significant FCF growth at current gold prices until debt repaid in 2017. LGC has ~US$31 mln in cash and US$50.7 mln of debt outstanding (~US$12.0 mln of which is current). With repayment of the SocGen & Mizuho facility beginning in H2/14 extra cash flow from the expansion will be used to service debt until all facilities are repaid (see Figure 2).
- Reiterate $1.80 target price and Outperform rating. LGC is currently trading at 4.6x EV/2015E CF vs. peers at 7.5x.