🕐28.03.13 - 10:54 Uhr

INVESTEC: AMARA MINING - FY RESULTS SHOWS PROGRESS ACROSS THE ASSET BASE - BUY




Amara Mining Amara Mining’s (AMA LN) FY12A results were broadly in line with expectations.

AMA produced 54koz at a cash cost of US$961/oz; guidance for FY13 stands at 50-60koz.

This should rise next year as Sega reaches steady state providing a source of ore for around two years.

Progress continues at Baomahun with 2013 likely to be an eventful period, leading up to the conclusion of a DFS (definitive feasibility study).

AMA has also been advancing Yaoure, with a recent major resource increase that provides longer term growth potential to follow Baomahun. * Kalsaka/Sega continues to provide the cashflow to support the rest of the group’s activities.

Progress developing the nearby Sega deposit was delayed due to the Burkina Faso elections last December.

The environmental permit is now expected in Q2, with trucking to commence mid-year providing an ore source for around two years. * Baomahun is advancing with a reserve estimate due mid Q2, to be followed at the end of the quarter with a feasibility study.

This is the company’s key growth project.

It will require significant financing, part of which is likely to come from Samsung with whom AMA has already agreed a US$20m facility.

However, with capex that was last estimated at around US$250m and equity markets proving to be tough, the company may have to JV part of the project. * Yaoure is also progressing with the recent major resource upgrade to over 2moz.

The deposit could well form the next economic mine to develop after Baomahun.

The deposit has considerable exploration potential that could drive additional longer term value. * Valuation: We have updated our target price, adjusting the production profile to reflect some delays at Kalsaka/Sega and applying a lower gold price forecast.

The TP is underpinned by risked NPVs using an 8% discount rate and a flat US$1,600/oz gold price (previously US$1,700/oz).
To access the full note please click here Analyst: Marc Elliott
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