AMERICAS METALS & MINING:PRECIOUS 1Q17 PREVIEW:LOWER GOLD & SILVER PRODUCTION; FLAT PRICES

时间:2017年04月21日 15:01:43 中财网
Lower production in 1Q17 slowing cashflow momentum
  In this note we outline our 1Q17 estimates for Precious Metals companiesunder coverage. We forecast aggregate Precious Metals EBITDA to decrease5% QoQ to $2.7bn with slightly higher gold and silver prices (~+1%) more-thanoffset by lower production. Sector Net Debt (ND) forecast at $11.1bn (-3%QoQ)。 We forecast ND to annualized EBITDA of 1.0x in 1Q17. With BalanceSheets generally well placed, we expect companies to increase explorationbudgets, assess growth projects options and examine M&A opportunities. Wemaintain Buys on Newmont, Barrick, Silver Wheaton and Pan American Silver.
Precious likely to remain volatile in 2017
During 1Q17, the gold price averaged $1,218/oz, flat vs 4Q16 ($1,215/oz) whilesilver price averaged $17.40/oz (+1%)。 In our view, Precious pricing is likely toremain volatile in 2017 (DBe $1,203/oz)。 Rising real interest rates placeheadwinds in front of gold, however we see this balanced with potentialheightened political risk with a number of elections due in 2017 (e.g. China,France, Germany, UK, Chile) and ongoing tension between particular countries.These factors may give gold some respite, with the market being moresensitive to these events since Brexit. However, while we believe that there aresupportive factors, it is not enough to build a bull case at this stage.
Our PTs are based on ~1x NPV. We have completed a mark-to-market for1Q17 commodities and updated numbers for companies pre-releasingproduction and 2017 guidance. Key risks: Commodity prices, FX, operations.
Lower production offset slightly by higher Precious prices
We forecast aggregate Precious Metals EBITDA to decrease 5% QoQ to $2.7bndespite a slight increase in the gold price (~$1,218/oz), 1% QoQ increase in thesilver price, offset by a lower production expected for companies undercoverage. Overall Net Debt (ND) is expected to decrease by 3% QoQ with mostcompanies expected to reduce their ND. We forecast ND/annualized EBITDAflat from 4Q16 to 1Q17-end at ~1.0x. With Balance Sheets now largely inorder, we believe companies will begin to increase exploration, examinegrowth projects and possibly consider M&A.
  We have adjusted our Silver Standard and Coeur Mining 1Q17 estimatesfollowing recent company production pre-release announcements. AmongstPrecious Miners, we maintain a Buy rating on Newmont (balance sheetflexibility, production growth, project pipeline and attractive valuation), Barrick(valuation, and further cost-out initiatives), Silver Wheaton (valuation, strongcash flows) and Pan American Silver (production growth from Dolores and LaColorada and exposure to Mexican Peso depreciation)。

Precious likely to remain volatile in 2017
During 1Q17, the gold price averaged $1,218/oz, flat vs 4Q16 ($1,215/oz) whilesilver price averaged $17.40/oz (+1%)。 In our view, Precious pricing is likely toremain volatile in 2017 (DBe $1,203/oz)。 Rising real interest rates placeheadwinds in front of gold, however we see this balanced with potentialheightened political risk with a number of elections due in 2017 (e.g. China,France, Germany, UK, Chile) and ongoing tension between particular countries.These factors may give gold some respite, with the market being moresensitive to these events since Brexit. However, while we believe that there aresupportive factors, it is not enough to build a bull case at this stage
The Precious sector is not overly cheap in our view but we view any pull-backsas an opportunity to add to positions. Our Buy rated stocks and preferredPrecious equities are mainly those with some degree of “self-help” includingBarrick, Newmont, Silver Wheaton and Pan American.
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