In a Sept. 1 research note, Edison Investment Research analyst Alison Turner reported that Kopy Goldfields AB (KOPY:ST) posted "a competent set of H1/21 results" despite a challenging start to 2021, and growth remains on track for full-year 2021 and longer term. Kopy is a Sweden-based company with hard-rock and placer mining operations in Russia.
Turner reviewed Kopy's H1/21 results. Production was down 14% in the year's first half as the company dealt in Q1/21 with a COVID-19 outbreak at Yubileyniy, one of its producing mines. Total H1/21 production from all of its operations was 20,700 ounces (20.7 Koz) of gold equivalent, down from 24.1 Koz in H1/20.
In Q2/21, Kopy also experienced some concentrate transportation delays due to inclement weather. However, it managed to ramp production up 69% and produce a total 13 Koz.
Despite these adverse events, Kopy's H1/21 EBITDA was US$14 million (US$14M), lower than its US$17.8M EBITDA a year earlier, due to decreased gold sales. The company's H1/21 EBITDA margin also fell short at 38% versus 40% in H1/20. Turner noted that Kopy tamped down costs such that they were lower year over year, at US$859 per ounce compared to US$861.
At the end of H1/21, Kopy had US$0.9M in cash, US$13.9M in available undrawn facilities, and 5.25 Koz of sellable gold. Net debt was US$59.6M.
Turner noted that Kopy's capital investment program "remains on track and is fully funded by existing debt facilities." The three major projects underway are the addition of a second flotation line at Yubileyniy (commissioning slated for early Q4/21), a new heap leach at Perevalnoe (commissioning expected by year-end 2021), and a new mine at Malyutka (expected to come online in 2023).
The analyst highlighted that Kopy maintained its full-year 2021 production guidance of 56 to 59 Koz and cited reasons why the company most likely will achieve. They include the additional production expected this year and Kopy's built-up gold inventory.
"We now forecast 2021 gold equivalent production of 56 Koz, at the lower end of the guidance range (previously we forecast 59 Koz) and gold equivalent sales of 57 Koz (previous forecast 61 Koz)," wrote Turner.
The outlook for Kopy's production longer term is also positive, Turner noted. By 2025, the company aims to grow its yearly production to 100 Koz of gold. Further, exploration is continuing at Kopy's joint venture project, Krasny.
"With two of those three projects set to come online before the end of this year, the company should start to see greater recognition of the strength of its growth profile within the next year as the significant investment begins to flow through to production and cash flows," Turner wrote.
Kopy is currently trading at about SEK1.88 per share.
[NLINSERT]
Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from Edison, Kopy Goldfields, September 1, 2021
This report has been commissioned by Kopy Goldfields and prepared and issued by Edison, in consideration of a fee payable by Kopy Goldfields. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.
Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.
Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.
No personalized advice: The information that we provide should not be construed in any manner whatsoever as, personalized advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.
Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.
