Production prowess provides profits

Q117 results have provided a solid start to FY17 and bode well for the company achieving its end year guidance of 40koz Au produced at cash costs of between US$800/oz and US$900/oz. Q117 cash costs were 13% below the lower bound of this guidance. Alongside its ongoing strong operational performance, exploration results for San Gregorio highlight the resource potential close to existing infrastructure, which should prove favourable for a much needed upgrade to San Gregorio’s reserve base. This note covers Q117 results (which were in line with our forecasts) and focuses on exploration results and how we consider they de-risk our valuation and extend the valuation time frame, from FY20 to FY22.