The Gold Report - Thu, Oct 26, 2017

Q3 Production Results Have Analysts Watching and Waiting for What This Gold Miner Does Next

With guidance projections being met, analysts are looking forward to Q4 results from this gold miner.

Asanko Mill

On Oct. 19, Asanko Gold Inc. (AKG:NYSE.MKT; AKG:TSX) announced Q3 production results from the Asanko Gold Mine, located in Ghana, West Africa. The announcement included the following highlights:

  • Quarterly gold production of 49,293 ounces and gold sales of 50,241 ounces, on track to meet 2017 revised production guidance of 205,000-225,000 ounces
  • US$63.6 million in gold revenue at an average realized price of US$1,265 per ounce
  • Nkran reconciliation confirming the Mineral Resource and Reserve Estimates
  • Industry-leading safety record maintained with a rolling 12 month LTIFR of 0.19

Peter Breese, Asanko's president and CEO, said, "Overall, our quarterly production performance for Q3 was very encouraging, with positive results in a number of key areas: reconciliations confirming the Nkran resource model, management of ore losses and dilution and the plant achieving milling rates in excess of 13,500 tonnes on a per day campaign basis. Although July and August production was impacted by the three mill motor outages, which equated to in excess of 5,000 ounces of lost gold production, the quarter still produced a very respectable 49,293 ounces. Looking ahead to the final quarter of the year, we maintain our revised guidance of 205,000-225,000 ounces."

In an Oct. 19 company brief, Raymond James analyst Chris Thompson stated that although production was impacted by three mill motor outages, Asanko Gold was able to maintain "its revised production guidance of 205-225 koz." He pointed out that Raymond James anticipates "higher production in 4Q17, ramping up further in 2018 with the addition of production from the Dynamite Hill satellite deposit." He highlighted that "1,180k tonnes at a grade of 1.8g/t Au were mined during the quarter, compared with [their] estimates of 1,058k tonnes at a grade of 1.66g/t Au."

Raymond James rates Asanko Gold Outperform with a target price of CA$3.50.

In an Oct. 19 company update, Canaccord Genuity analyst Rahul Paul stated that "processing rates achieved 13,500 tpd during the quarter, but averaged 9,370 tpd due to three mill motor outages during the quarter resulting in 11 total days of lost milling time. Despite the downtime, we are encouraged by recovery rates that exceed our forecasts (94% actual vs our estimates of 93%)." He explained that Canaccord "expects that the company will need to consistently deliver on stated targets going forward to regain investor confidence and to fully address prevailing concerns regarding Nkran."

Canaccord rates Asanko Gold as a Buy with a target price of CA$2.50.

Andrew Breichmanas, an analyst with BMO Capital Markets, stated in an Oct 19 report that Asanko's "plant processed 862kt at 1.9g/t compared to our estimate of 800kt at 1.8g/t with recoveries continuing to exceed design levels at 94%." He noted that "the mine continues to generate cash with operations expected to improve further as Dynamite Hill becomes operational in Q4/17."

Breichmanas also highlighted that "delivering on near-term cash generation targets is critical to demonstrate performance of current operations, clarify timing of growth plans, and determine longer-term financing requirements."

BMO Capital Market rated Asanko Gold as a Market Perform with a target price of CA$2.00.

Asanko is currently trading at CA$1.23.

Disclosure:
1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Asanko Gold Inc. Streetwise Reports does not accept stock in exchange for its services. Click below for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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