MSA: Large Beat on Q2 Financial Results
What you need to know:• Mineros reported Q2 financial results that came in well ahead of our expectations. MSA reported revenue of $182.4M (+37% YoY) vs. our estimate of $148.8M and OCF (after WC) of $59.8M vs. our estimate of $36.5M and $7.1M in Q2/24.
• MSA revised its cost guidance upward due to the higher gold prices and higher costs for the artisanal mining segment (margins maintained).
• Mineros ended the quarter with $109.7M in cash and $25.6M in debt, prior to the acquisition of the remaining interest in La Pepa from PAAS.
Yesterday, after market close, Mineros S.A. (MSA:TSX, MINEROS:CL) reported its Q2 financial and operating results, which largely beat our expectations. MSA revised its cost guidance upward, but investors should not be alarmed, given that the higher gold price results in higher costs to purchase ore from artisanal miners in Nicaragua. We recently initiated coverage on Mineros, read the report here. We are maintaining our BUY rating and C$4.00/share target price on MSA.
Financial & Operational Highlights
• Record revenue for the quarter of $182.4M (+37% YoY) vs. our estimate of $148.8M. This was driven by the increased gold price, which was $3,313/oz in the quarter vs. our model at $2,900/oz.
• Gross profit was $75.0M, with a gross margin of 41%, compared to our forecast of 39% and the 31% from Q2/24.
• Adjusted EBITDA totalled $82.3M (45% margin, +66% YoY), largely beating our estimate of $51.4M.
• Operating cash flow (after WC) was reported at $59.8M, compared to our estimate of $36.5M, and the $7.1M in Q2/24. Net free cash flow was $45.1M vs. negative values last year.
• Net income for the quarter came in at $43.5M, or $0.15/share, vs. our estimate of $11.5M or $0.07/share.
• The Company paid dividends of $7.5M in Q2, and capital expenditures for the quarter totalled $22.8M for existing mines and exploration projects.
• Cash cost per ounce sold was $1,681/oz, while AISC was reported at $1,940/oz, vs. our expectations of $1,437/oz and $1,654/oz, respectively.
• Mineros ended the quarter with $109.7M in cash and $25.6M in debt, prior to the acquisition of the remaining interest in La Pepa (see page 2).
Mineros is primarily engaged in the mining of gold, as well as in related activities pertaining to the mining industry in general, including the mining of precious metals, metallic or non-metallic mineral substances or hydrocarbons.
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