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Disclosure: Monument Mining Limited has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
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Price Performance (1-year)
Owns a producing gold mine in Malaysia, and exploration projects in Western Australia. Total compliant resources of over 1.2 Moz Au
MMY has been processing sulphide materials since December 2022, with cumulative production exceeding 46 Koz by September 2024
Q1 production was up 11% YoY to 8 Koz, but down 33% QoQ, missing our estimate by 11%, as the company processed lower grade ore
We expect grades will improve in the coming quarters, as the average grade of the sulphide reserves is 15% higher than the Q1 average
Despite lower grades, cash costs declined 1% QoQ and YoY to $837/oz, driven by operational efficiencies, beating our estimate of $890/oz
With over 700 Koz of sulfide resources remaining, we believe the mine could produce up to 14 more years, with annual production expected to rise to 40 Koz from the previous five-year average of 12.5 Koz
Q1 revenue was up 4% QoQ, and 180% YoY, beating our estimate by 2%, driven by higher gold prices
EBITDA margins, EBITDA, and free cash flows improved significantly both QoQ and YoY, driven by higher revenue and lower cash costs
However, EPS declined QoQ due to unusual FOREX losses driven by a weaker US$. Strong balance sheet, with $25M in working capital, and no debt
We are raising our EPS estimates due to higher gold prices, partially offset by lower production in Q1
Sector multiples are down 8% since our previous report in October 2024. MMY is trading at a 77% discount (previously 75%) to comparable junior gold miners
Applying sector multiples, we arrived at a fair value estimate of C$0.45/share (previously C$0.43/share) on the Selinsing mine
Our DCF valuation on Selinsing is C$0.43/share (previously C$0.42/share), driven by higher near-term EPS estimates.
Using a sum-of-parts valuation model, we arrived at a fair value estimate of C$0.59/share (previously C$0.56/share)
We are reiterating our BUY rating, and adjusting our fair value estimate from C$0.56 to C$0.59/share. MMY delivered solid operational performance in Q1-FY2025, despite lower grades. While the stock has seen significant gains in the past 12 months, its valuation remains attractive compared to peers. Given our bullish outlook for gold, and potential M&A activity in the sector, we believe MMY offers significant upside potential.
The following risks, though not exhaustive, will cause our estimates to differ from actual results:
Maintaining our risk rating of 4 (Speculative)
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