Analyst Actions: Credit Suisse Tweaks 2013 Forecast for AuRico Gold
We maintain our Neutral rating and $9 TP: "We fine-tune our estimates for 2013 in advance of AUQ's 2012YE results scheduled for March 25th release after market. Our TP is based on an even weighting of our $10/sh NAV based TP and $7/sh OpCFa based TP. Our NAV is based on 1.3x our $6.93/sh DCF, we add net cash of $1.21/sh at par. Our OpCFa TP is based on 22x our 2013E OpCFa of $0.32/sh."
Credit Suisse 2013 estimates trimmed for both assets: "Our estimates of 209kozs (from 219kozs) at $613/oz cash costs (from $600/oz) are in-line with AUQ's 2013 guidance of 190-220kozs at $540-$620/oz. Credit Suisse capex estimate of $188M is in-line with AUQ's $170M-$195M guidance. We are lowering our 2012/2013/2014 EPS estimates to $0.26/$0.37/$0.33 (from $0.27/$0.41/$0.35) respectively."
Dividend policy links payout to financial performance: "On February 21st AUQ announced a quarterly dividend policy with a $0.16/sh annualized payout in 2013 ($0.04/sh quarterly), reflecting a 2.4% yield on the current share price. For 2014 and thereafter the quarterly dividend will be based on 20% of the preceding quarter's reported operating cash flow."
Investment thesis: "We prefer AUQ's streamlined asset base, better FCF generating ability and greater transparency under new CEO Scott Perry. We believe that a further re-rating would require consistent execution on this rebased operational guidance and the successful ramp up of the underground mine at YD. We note that the first year of operations at an underground asset has increased risk."
Catalysts: "(1) Execution on 2013 guidance; (2) Underground ore hoisting from the Northgate shaft by Q3/13 and declaration of commercial production from the underground."
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