Ann: Gwalia Mass Extraction Feasibility Study, Guidance & webcast, page-112

I think the downgrade in the mining production at Gwalia for 2019 and 2020 is not too significant. I think the company's declaration that the production at Gwalia from 2021 onwards at 230koz p.a. may have been disappointing as investors should expect that the Gwalia Mine Expansion project should end up with higher production. However, for the stock price to fall almost 30% in one day seems to be more like as if the mine is closed temporarily like what happened to Regis in early 2015. Thus, while the news is disappointing in terms of higher capex required for the project with lower production going forward, this hardly justifies a freakish fall in the stock price.

Based on the adjusted forecasts, the production for 2019 is still 365koz-375koz at around $1 050/oz AISC meaning EV/AISC-adjusted production of $3 900/oz. As for the 2020 production is around 330-360koz at (let's say) around $1 200/oz AISC implying EV/AISC-adjusted production of $4 800/oz. These valuation ranges are not excessive and seems to suggest fair value for the 2019 production guidance and slightly overvalued for the 2020 production, if these figures are perhaps conservative.

I think it is worth keeping an eye on at this current price. The company has substantial cash reserves and they are more than capable in turning this around. The price drop may be pulling the valuation back to more reasonable levels.