In Q3-2019, Premier Gold Mines Limited (“Premier”, “company”) reported revenues of $19 million, down 31% YoY, and 18% QoQ, due to nil sales from its South Arturo mine (expected), and an unexpected 17% YoY decline in production at Mercedes due to lower grades. EBITDA was $1 million in Q3-2019, down 83% YoY.
At South Arturo, commercial production was achieved in October 2019. Phase 1 pit is expected to be in production by H2-2020.
In the Q3 conference call, management indicated that they expect Q4-2019 production from Mercedes to be significantly higher, from stronger grades.
We are lowering our 2019 gold sales estimate from 77 Koz to 73 Koz, while maintaining our 2020 estimate at 77.5 Koz.
In October 2019, an updated resource estimate was announced on the Greenstone project, which showed measured and indicated resource of 7.11 Moz (up 11% from a previous 2016 estimate), and an inferred resource of 3.10 Moz (up 25%). Included in this estimate is a 5.87 Moz gold measured and indicated resource with open-pit potential (up 26%).
Balance sheet remains healthy with $33 million in cash at the end of Q3-2019, and a relatively low debt to capital of 11% versus the Gold industry average of 49% (Source: S&P Capital IQ).
We expect a number of catalysts in the next 12 months; key ones being ramp up of production at South Arturo, improved grades in Q4 to result in higher production at Mercedes, a Feasibility Study (“FS”) on Cove in 2020, and an updated FS on Greenstone Gold before 2019 year-end.
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