Majestic Gold Corp. Reports 2021 Annual Results Greetings, below is my brief analysis of the points that are important to me.
For the points I refer to the source of the "MDA - Year-end Report for the period ended December 31, 2021" www.majesticgold.com/site/assets/files/...2021-q4-mda-mjs.pdf
Fewer Ounces Produced:
- due to the known closure of all non-coal mines
- Open Pit since 08.2021 in full production again with 8,400 ounces (2021 - 20,000 ounces - 2020 - 30,000 ounces)
- Underground again in full production since 12.2021 with 140 oz (2021 - 600 oz - 2020 - 5000 oz)
(page 7)
Additionally, due to the expanded mine permit and higher gold grades, Majestic expects an increase in produced ounces from the base 2021 level
(Page 10)
Conclusion:
For Q1 2022 +10,000 ounces and year end 2022 +40,000 ounces are very likely.
Net Loss of $150,000 for Q4 2021:
Income tax expense of $7.7 million in Q4 2021 versus $4.3 million in Q4 2020
Mine Interruption Expenditure of $1.6M Q4 2021 and $3.3M for Year End 2021
(page 10 and 16)
Conclusion:
In particular, the high tax expenses and mine interruption costs result in a net loss of $150,000 in Q4 2021 and a net profit of $7.7 million for year-end 2021 compared to $15 million for year-end 2020
Summary and Outlook:
I am very confident in the following conservative forecast:
ounces produced: 40,000
once sold (minus smelting fees): 35,000
Total production cost: $750 per ounce
Average annual gold price: $1850
EBITDA: $38.5M
Net Income: $20M
P/E = Share Price / (Net Income / Number of Shares)
2.6 = $0.05 / ($20 million / $1.05 billion)
I expect a P/E of between 10 and 15, which equates to a stock price of between $0.20 and $0.30
Fingers crossed for accelerated buyback program, dividend, new promising projects.
Comparison (both pay dividend):
Barrick Gold PE Ratio: 20.94 for March 18, 2022
Newmont PE Ratio: 51.01 for March 18, 2022
I think Majestic will either pay a dividend in 2022 or significantly increase the share buyback program.
Best regards
Richard