Anticipating Record Gold Production and EPS

• We are resuming coverage on MMY.  Monument owns gold projects in Malaysia and Western Australia. Its 100% owned Selinsing gold mine has been operational for 14 years, producing 363+ Koz to date.
•  In late 2023, the company began processing higher-grade sulfide materials after depleting all oxide resources. With over 700 Koz of sulfide resources remaining, we believe the mine could produce up to 14 more years, with annual production projected to rise to 40 Koz from the previous five-year average of 12.5 Koz.

• In FY2024 (9M), MMY produced 20 Koz gold, up 225% YoY. Cash costs declined YoY, from $1,536 to $878/oz. Margins improved, and both net income and free cash flows turned positive.
• We anticipate record production and EPS in FY2024 and FY2025. 
• As of March 2024, MMY had $23M in working capital, with no debt.
• MMY is trading at 0.5x forward EBITDA vs the sector average of 4.4x, an 88% discount. 
• Gold is trading near record highs. We are more bullish on gold stocks than the metal itself, with gold producer valuations averaging 21% lower than the past three instances when gold surpassed US$2k/oz.

Price Performance (1-year)

*See important disclosures at the bottom of this report rating and risk definitions. All figures in C$ unless otherwise specified.

Portfolio Summary

Owns a producing gold mine in Malaysia, and exploration projects in Western Australia. Total compliant resources of over 1.2 Moz Au 

Selinsing Gold Project

MMY owns and operates the Selinsing gold mine in Pahang State, Malaysia. The project encompasses the Selinsing, Buffalo Reef, Felda Land, Peranggih, and Famehub properties, covering 150 km2.

Located 158 km north of Kuala Lumpur. An open-pit gold mine + a 950 ktpa (thousand tonnes per annum) sulfide processing plant 

Commercial production began in 2010, with 363+ Koz of gold produced to date

From 2010 to 2022, MMY mined oxide and transitional materials. Since December 2022, MMY has been processing sulphide materials, producing over 26 Koz to date 

From 2020 to 2022, production and grades declined, and cash costs increased due to depleting oxide/transitional materials. However, production ramped up in 2023, with the start of processing sulfide materials

In 2024 (9M), MMY produced 20 Koz, up 225% YoY. Cash costs declined YoY, from $1,536 to $878/oz

With over 700 Koz of sulfide resources remaining, we believe the mine could produce up to 14 more years, with annual production projected to rise to 40 Koz from the previous five-year average of 12.5 Koz

Grades are attractive for an open-pit mine

Resource Expansion Potential

Sulphide resources are open at depth. Multiple unexplored regional targets

Located 765 km northeast of Perth

Murchison Gold Project

This project is located in the prolific Murchison goldfield in Western Australia, which has produced over 35 Moz of gold. The project encompasses the Burnakura, Gabanintha, and Tuckanarra properties, covering 230 km2. 

Location Map

Lies within the Murchison goldfield, which hosts gold producers such as Westgold Resources (ASX: WGX/MCAP: $783M) and Ramelius Resources (ASX: RMS/MCAP: $1.4B) 

Burkanura

This property hosts several deposits, and historic open-pit/underground mines. 

381 Koz gold spread across five deposits

Plant and Infrastructure

Burnakura also hosts a 260 Ktpa CIL processing plant, with an option to expand capacity to 750 Ktpa

Resource Model

20+ km of prospective strike length. Resources remain open at depth

Gabanintha

This property has six historical pits with near-surface high-grade gold mineralization.

Gabanintha Open-Pits

Hosts a historical resource of 153 Koz gold, which is open at depth. Exploration has identified 30 regional targets

In February 2024, JV partner Odyssey Gold (ASX: ODY/MCAP: $9M), announced a resource estimate of 407 Koz gold (2.45 gpt) for Tuckanarra. MMY owns a 20% free-carried interest up to a production decision

Financials (Year-End: June 30th) 

Due to the depletion of oxide materials, revenue, margins, and EPS experienced annual declines from 2020 to 2022

However, in 2024 (9M), driven by the start of processing sulfide materials, revenue surged by 256% YoY, with improved margins, and both net income and free cash flows turned positive 

Strong balance sheet, with $23M in working capital, and no debt

FRC Projections and Valuation 

We anticipate record revenue and EPS in FY2024 and FY2025

MMY is trading at an 86% discount to junior gold producers 

Applying sector multiples, we arrived at a fair value estimate of C$0.36/share for the Selinsing mine

Our DCF valuation of Selinsing is C$0.37/share, based on a 12-year mine-life, using 100% of M&I and 50% inferred sulphide resources

We are valuing Murchison’s resources based on the sector average multiple of C$39/oz for junior gold explorers. 

Using a sum-of-parts valuation model, we arrived at a fair value estimate of C$0.51/share

We are resuming coverage with a BUY rating, and a fair value estimate of C$0.51/share. We are more bullish on gold stocks than the metal itself, with gold producer valuations averaging 21% lower compared to the past three instances when gold surpassed $2k/oz. 

Risks

Assigning a risk rating of 4 (Speculative)

The following risks, though not exhaustive, will cause our estimates to differ from actual results:

• The value of the company is dependent on gold prices 
• FOREX
• Operational 
• Exploration and development 

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