Q3/12 in-line, delivering on back end loading
EGO reported Q3/12 EPS of $0.11, in-line vs. Credit Suisse at
$0.11 and Bloomberg consensus of $0.11. Slight beat on production
and costs offset by slightly higher than forecast depreciation and
G&A vs. Credit Suisse estimates.
Q3 operating highlights, production a slight beat: Gold
production of 170kozs (commercial+non-commercial) was ahead of
Credit Suisse est. of 163kozs. Cash op. costs of $493/oz largely
in-line, coming in 3% lower than $508/oz Credit Suisse est. Total
cash costs of $567/oz also in-line vs. $578/oz Credit Suisse
Kisladag strong offsets weakness at Jinfeng, White Mountain. TJS
in-line: Kisladag beat with 84kozs at $363/oz (
) vs. 78kozs at $472/oz. Stronger QoQ leach performance was
expected but came through better than expected on leach cycle
recoveries. TJS was in-line with 29kozs at $593/oz vs. Credit
Suisse est. of 28kozs at $588/oz. Jinfeng production was in-line
with 26kozs vs. 25kozs Credit Suisse est., but costs were impacted
by more stockpile material being processed than we had forecast
(Jinfeng is known to be in a waste stripping phase). White Mountain
production and costs weak on the back of lower than forecast
As expected, Efemcukuru concentrate backlog to be sold:
Efemcukuru produced 14kozs vs. 13kozs Credit Suisse est.
(pre-commercial); this includes no operation of the concentrate
treatment plant at Kisladag in Sept., now pending modifications to
the circuit. As noted in our Oct. 15th note "In depth review of
Aegean assets," the concentrate treatment plant is experiencing a
metallurgical issue regarding copper, which was insoluble in the
metallurgical testwork but appears to be soluble in the plant and
is currently impacting the electrowinning process. EGO expects a
three to six month timeframe to resolve the issues (the solution
could be either a SART plant or adding more carbon). In the
meantime, EGO is negotiating third party concentrate treatment.
Efemcukuru produced 27kozs in concentrate during the quarter and
EGO now has 51kozs contained in concentrate.
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