Production growth could drive Pantoro higher


Published 03-APR-2019 10:03 A.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Shares in Pantoro Ltd (ASX:PNR) were sold down heavily in 2018, until the company staged a recovery in November which resulted in a surge of more than 50%.

Between mid-November and late December the company’s shares increased from 16 cents to 26 cents, and they continued to trade around that high until last week when they retraced to 24 cents as the gold price faltered.

However, last week’s retracement in the gold price is of little concern, particularly for an Australian producer such as Pantoro.

The precious metal is still fetching around $1830 per ounce based on current commodity price and the AUD:USD exchange rate.

December quarter all in sustaining costs (AISC) were $1100 per ounce, leaving a healthy margin of $730 per ounce.

As a backdrop, Pantoro is an Australian gold producer with its 100% owned Halls Creek Gold Project in the Kimberley region of Western Australia being the key operational focus.

The project provides the company with a platform for growth through the operation of its first producing gold asset, which includes underground and open pit mines, and a modern processing facility.

Pantoro commenced production in 2015, and since then the Mineral Resource and Ore Reserves have been significantly upgraded, with both higher grades, and additional ore lodes identified during mining.

Production steps up to 85,000 ounces in 2020

The company is currently producing gold at levels exceeding its feasibility study targets and has expanded to a production rate of between 50,000 and 55,000 ounces per annum.

Analysts at Hartleys are expecting production to jump substantially in fiscal 2020, projecting 85,000 ounces, which the broker anticipates will deliver a net profit of $39 million, representing earnings per share of 6.4 cents.

This places the company on an attractive forward PE multiple of 3.7.

Hartleys resource analyst, Paul Howard who has a 12 month share price target of 30 cents on the stock said, “We maintain our Speculative Buy recommendation given the latest underground drilling outside the resource at the Anderson Lode is set to deliver an additional 40,000 to 45,000 ounces, ore sorting could deliver a step change in production and there is large exploration upside regionally.”

Resource upgrade with more to come

Another positive development occurred in March as the Wagtail Mineral Resource and Ore Reserve was updated to include drilling which was completed following the May 2018 Mineral Resource estimate and Ore Reserve calculation.

The total Mineral Resource has increased by 17%, to 632,000 tonnes at 7.3 g/t gold for 147,300 ounces.

Ore Reserves at Wagtail increased by approximately 20% as a result of the upgrade, resulting in a combined Wagtail Ore Reserve of 393,000 tonnes at 5.9 g/t gold for 74,000 ounces.

The Mineral Resource remains open at depth and along strike, and with an active drilling campaign in place there is scope for further share price accretion as results come to hand.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.


Discover Small Cap
Biotech Stocks

Join thousands of other Investors following our stock commentary for Free