RE:RE:Raymond James downgradesOn Nov 9th, TD said $10.50. I can't post the full report but here is the preamble.
Alio Gold Inc.
Steven Green, CFA
(ALO-T, ALO-N) C$4.73 | US$3.89
Mengdi Li, CPA, CA (Associate)
2017 Guidance Reduced; However 2018 Outlook Intact
Event Recommendation: Alio Gold reported Q3/17 financial results; production was previously released. The
company has also reduced their 2017 production guidance slightly. Risk: Impact: MIXED 12-Month Dividend (Est.): C$0.00
12-Month Total Return: 122.0%
Weaker Q4 expected, however 2018 outlook is good: It was a solid quarter,
however the company reduced 2017 production guidance slightly due to pre-
stripping ramp up delays at San Francisco. As of November, the company has
gained access to the main ore body and has started delivering ore to the crusher
at planned rates and grade, and they will be in good shape heading into 2018.
Incorporating the results, our NAV declines to C$8.80/share from C$9.05/share
previously.
Adjusted EPS of $0.10 was above our estimate of $0.07 and consensus of
$0.05, reflecting lower overhead and taxes. Our adjusted EPS calculation of $0.10
excludes the impact of a $1.1mm gain on revaluation of warrant liabilities.
CFPS (pre-working capital) of $0.15 was in line with our estimate of $0.16 and
above consensus of $0.10.
Production of 19,429 oz was previously released; however, costs of $886/oz
were not previously announced and came in above our estimate of $837/oz. The
company calculates Q3 AISC of $1,104/oz.
Balance sheet improves; another financing on the horizon: Net cash
increased to $68.5mm from $35.9mm previously, reflecting the C$50.4mm bought
deal which closed in July. Management has also noted that a potential debt
financing for ~$90mm is expected to be arranged within the next six months in
order to fund Ana Paula (total capital cost estimated at ~$137mm). The company
is currently reviewing proposals.
Guidance Reduced: Due to the ramp up delay, Alio has reduced its 2017
guidance to 82k-86k oz, down slightly from previous guidance of 86k-92k oz.
TD Investment Conclusion
We are maintaining our BUY recommendation and our target price of C$10.50.
With the optionality of the producing San Francisco mine and the new management's
focus on surfacing value for Ana Paula, which has favourable economics, we
continue to believe that there is value to be surfaced. We view the company as a
potential acquisition target.