OTCPK:RDIAF - Post by User
Post by
dangerousjdon Jan 10, 2014 11:16am
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Post# 22078095
Northland Capital likely to upgrade Price Target
Northland Capital likely to upgrade Price Target MINING: ()
Q314 RESULTS: UPGRADE TO FORECASTS AND PRICE TARGET EXPECTED
- Revenue from Rockwell operated mines for the nine months to date remained level at USD$19.8m compared to the previous year (excluding net royalty revenue).
- Revenue from beneficiation for the nine months to date remained level at CAD$3.1m compared to the previous year.
- Total revenue for the nine months to date (including contractor revenue) increased to CAD$31.3m from CAD$23.8m the previous year.
- For the nine months to date LBT was CAD$2.4m compare to CAD$9.3m the previous year.
- Rockwell sold two exploration projects during the quarter and we expect Rockwell to receive around CAD$2.5m from the sale next financial year. These projects were non-core to Rockwell and the sale is a major bonus for the Company. These projects were outside our valuation.
- As announced on 09/12/13 Rockwell is also anticipating additional funds from its new BEE partner and we expect the first tranche to boost the company’s coffers before the end of the financial year.
- All these developments are likely to have a net positive effect on our forecasts and price target, which is currently under review.
NORTHLAND UK VIEW: Q314 demonstrated that ’ turn around has made significant progress, but operational costs continue the biggest hurdle for the Company. LBT for the first nine months of this financial year was dramatically reduced compared to the prior year, giving comfort to investors that things are moving in the right direction. At the Saxendrift Mine, Rockwell focused on mining the higher grade Saxendrift Extension area during the quarter, pushing up the average grade but the increased haulage distances resulted in increased fuel costs and reduced volumes. The aging fleet also pushed up maintenance costs and Rockwell is addressing the fleet issue with a detailed optimisation study. Overall the net effect at Saxendrift was positive and is likely to increase our FY14 forecasts. At Saxendrift Hill, operational costs came down dramatically as the mine completed its ramp up, grades were above our expectations and the combined effect is likely to lead to an upgrade in our FY14 assumptions. At Niewejaarskraal, costs were well above our expectations and volumes & grades well below our forecasts caused by delays in the ramp up, we expect this will lead to a downgrade in our FY14 assumptions. Overall Q314 bodes well for FY14, added to this Rockwell has built up a substantial diamond inventory that we would expect to be sold in Q414 leading to a strong end of year performance. The additional funds from the sale of the exploration projects and funds from the new BEE partner area also expected to have a positive impact on our forecasts and valuation.