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Argonaut sets 31c price target for Millennium following strong first quarter

4th May 2018
Resources Rising Stars
Pilbara gold miner Millennium Minerals (ASX: MOY) has been rated a Speculative Buy with a price target of 31c per share by leading Perth broker, Argonaut Securities.
According to resource analysts James Wilson and Matt Keane, the company’s strong first quarter production of 20.3koz at an all-in sustaining cost (AISC) of $1,295/oz (vs. $1,290/oz in the December quarter) for its Nullagine gold project in WA was within its stated guidance range of 75-80koz for the full year.
Cash and bullion increased to $23.3 million after $4.1 million was spent on exploration and capital spending during the quarter.
“Production for the remainder of CY18 is expected to be sourced from Golden Eagle and supplemental feed from the new Redbeard deposit and Shearers North,” Argonaut said.
While production is expected to be slightly lower, at 16-18koz, and costs slightly higher at $1,500-1,600/oz in the June quarter – mainly due to higher pre-stripping levels at the Golden Eagle deposit – the outlook for the rest of the year is strong.
Portal development has commenced at the new Bartons underground mine, with high-grade development ore expected in Q4 ahead of planned stoping in Q1 next year.
Production in Q4 this year is expected to rise to 24-26koz at an AISC of $1,100/oz, reflecting the higher grade material coming into the mine plan.
“Overall this is positive news,” Argonaut said. “The March quarter is often affected by rain delays so this is a pleasing result. MOY has the potential to ease the strain on its mine plan with the commencement of mining at Golden Eagle and development at Bartons, two larger ore sources which will take the burden off mining of multiple pits.
“MOY has also started the procurement process for its sulphide expansion study. The proposed design will see an ultra-fine grind mill and intense cyanidation circuit added on to the existing mill at an estimated direct cost of $15m and commissioning in Q1 2019.
“We see improvement in the mine plan and the capacity to treat the refractory sulphide ores as a key milestone in achieving a critical mine life extension at Nullagine.”