RNC Minerals announced it has identified a new five-kilometer structure at its Higginsville operations in Western Australia. This renewed exploration focus, follows the recent restructuring of the royalty at Higginsville, which we believe unlocked the 1.9M oz Au plus further exploration potential (as demonstrated by this release). RNC remains attractively valued as its transformation to profitability is not yet priced in providing investors a low-cost option on the “High-Grade Contact Zone” at Beta Hunt and exploration upside at Higginsville.
RNC Minerals announced 2020 production and cost guidance for its Australian gold operations. The guidance, which we view as conservative, points to improving costs and increased production – likely making 2020 RNC’s first profitable year. We expect the company to materially beat its guidance in 2020, as it does not account for coarse gold. We are maintaining our fair value estimate of C$0.90/sh (unchanged) and believe RNC should re-rate as the company continues to demonstrate that it has transformed into a profitable gold producer.
We are publishing our first “Endangered Species List”, which is a list of mining investment assets we consider most likely to go extinct (be acquired) in 2020. In addition, we plan to update this list of names throughout the year. In this note, we outline the criteria used for being selected to our list and a brief rationale of the specific catalyst that we believe could lead to the takeout occurring.
RNC Minerals announced higher than expected Q4/19 production resulting in RNC beating H2/19 guidance and our estimates. Additionally, the company added C$9M in cash to its balance sheet in Q4, net of a C$3M debt repayment. We believe that this is another in a series of catalysts, that should demonstrate RNC’s transition to profitability and rerate of the stock towards our fair value estimate of C$0.90/sh.
RNC Minerals announced a maiden reserve estimate of 310koz Au for its Beta Hunt gold mine (100% owned) in Kambalda, Western Australia. Importantly, the new reserve estimate is in line with our expectations and should serve as the basis for Beta Hunt’s mine plan. This maiden reserve has room to expand, and likely understates the actual grade as it does not account for the coarse gold. We view the maiden reserve as a meaningful de-risking step and another catalyst that should demonstrate RNC’s transition to a more stable and profitable mining company, which has yet to be priced in by the market.
RNC Minerals announced it has restructured the royalties on its Higginsville project, reducing them from what was effectively +20% NSR to ~5% NSR at current gold prices and production levels. The net result is significantly better long-term economics for Higginsville, which is likely to result in a change to the mine plan and increased exploration at the project. We believe this is the first in a series of catalysts that should rerate the stock towards our fair value estimate of C$0.90/sh.
RNC Minerals announced strong November gold production from its Beta Hunt and Higginsville mines (100% owned) in Western Australia. Results are in line with our expectations for a strong Q4, resulting in the company beating its H2 2019 guidance. We believe that this is the first in a series of catalysts, that should demonstrate RNC’s transition to profitability and rerate of the stock towards our fair value estimate of C$0.90/sh.
RNC Minerals (TSX:RNX) has transformed itself into a profitable Australian gold producer, that we believe has yet to be recognized by the market. RNC is ramping up production at its 100% owned Beta Hunt and Higginsville mines in Western Australia and we expect the company to demonstrate improved production and costs over the course of 2020. In our view, the transition to profitability has not yet been recognized by the market and we believe that the combination of improving quarterly results and technical updates (Beta Hunt maiden reserves, Higginsville resource update and 2020 guidance) should provide RNC with the momentum to re-rate to our new C$0.90/sh fair value estimate (was C$1.00/sh).
RNC Minerals announced positive FQ3 financial results, which highlight strong QoQ production, cost reduction, and exploration results. We believe the company is positioned to meet and potentially exceed H2 2019E guidance and is well positioned to become a +100koz/year producer next year. We maintain our fair value estimate of C$1.00/sh and expect continued QoQ operating improvements and exploration updates to drive a re-rating towards our fair value estimate.
RNC Minerals reported another high-grade gold discovery at its Beta Hunt Mine in Western Australia. An estimated 3,200 ounces of coarse gold has been recovered approximately 30m north of the Father’s Day vein at the 15 Level A Zone (Figure 1). We continue to believe that the high-grade gold clusters at Beta Hunt are not anomalies but are likely to be regular occurrences that have potential to provide a significant boost to the bottom line. Company guidance and our model currently ignore these treasure troves until they are on the balance sheet but we think the market should pay attention.