Premier Gold Mines Limited (TSX: PG) – Lower Grades Impact Q3 Revenues / Management Expecting Record Q4
Fundamental Research Corp has issued a report entitled “Premier Gold Mines Limited (TSX: PG) – Lower Grades Impact Q3 Revenues / Management Expecting Record Q4†and dated November 18, 2019. The full report is now atPG is an FRC Top Pick
Key Highlights
 In Q3-2019, Premier Gold Mines Limited (“Premierâ€, “companyâ€) reported revenues of $19 million, down 31% YoY, and 18% QoQ, due to nil sales from its South Arturo mine (expected), and an unexpected 17% YoY decline in production at Mercedes due to lower grades. EBITDA was $1 million in Q3-2019, down 83% YoY.
 At South Arturo, commercial production was achieved in October 2019. Phase 1 pit is expected to be in production by H2-2020.
 In the Q3 conference call, management indicated that they expect Q4-2019 production from Mercedes to be significantly higher, from stronger grades.
 We are lowering our 2019 gold sales estimate from 77 Koz to 73 Koz, while maintaining our 2020 estimate at 77.5 Koz.
 In October 2019, an updated resource estimate was announced on the Greenstone project, which showed measured and indicated resource of 7.11 Moz (up 11% from a previous 2016 estimate), and an inferred resource of 3.10 Moz (up 25%). Included in this estimate is a 5.87 Moz gold measured and indicated resource with open-pit potential (up 26%).
 Balance sheet remains healthy with $33 million in cash at the end of Q3-2019, and a relatively low debt to capital of 11% versus the Gold industry average of 49% (Source: S&P Capital IQ).
 We expect a number of catalysts in the next 12 months; key ones being ramp up of production at South Arturo, improved grades in Q4 to result in higher production at Mercedes, a Feasibility Study (“FSâ€) on Cove in 2020, and an updated FS on Greenstone Gold before 2019 year-end
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