In an Oct. 28 research note, CIBC analyst Bryce Adams reported that Premier Gold Mines Ltd.'s (PG:TSX) "first project at South Arturo, El Niño underground, has achieved commercial production ahead of schedule and on budget."
South Arturo is a joint venture project between Premier that owns 40% and Nevada Gold Mines, 60%. Previously, Premier was expected to attain commercial production at El Niño next year, in Q1.
With the early start, CIBC now expects gold production at South Arturo to exceed its forecast of 4,000 ounces (4 Koz) as well as Premier's 2019 guidance of 5–10 Koz. "We now model South Arturo year-end 2019 production of 11.1 Koz," Adams indicated.
When the South Arturo expansion is done, Adams pointed out, the operation will run at full capacity via the phase 1 open pit. Pre-stripping, which is ongoing, remains on schedule for commercial production in H2/20.
As for exploration potential at El Niño and nearby, recently returned drill results are "positive" and "bode well for future resource and mine plan updates," Adams highlighted. Gold intercepts included 24.4 meters (24.4m) at 20.6 grams per ton (20.6 g/t) at El Niño underground and 113m at 7.3 g/t in the proposed phase 3 pit, which hosts most of South Arturo's heap-leach material.
CIBC maintained its Outperformer rating and a CA$3.85 price target on Premier Gold "on the basis that 2019 is a transition year for South Arturo and the company overall," noted Adams. Premier is currently trading at around CA$1.97 per share.
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Disclosures from CIBC, Premier Gold Mines Ltd., October 28, 2019
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Important Disclosure Footnotes for Premier Gold Mines Ltd. (PG)
· Premier Gold Mines Ltd. is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months.
· CIBC World Markets Inc. has received compensation for investment banking services from Premier Gold Mines Ltd. in the past 12 months.
· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Premier Gold Mines Ltd. in the next 3 months.
