Company news: Aurelia Metals, Webjet and Paladin Energy
Aurelia Metals (positive impact) provided a production update for the June quarter - a fantastic result that saw shares in the company end the week more than 21% higher. The company had previously flagged that production for the quarter was tracking to exceed expectations, with 16 thousand ounces of gold produced to May. However, results again exceeded expectations, with 32 thousand ounces produced for the quarter. This implies that 15 thousand ounces of gold were produced in June. As we have previously mentioned, the grades of gold mines by Aurelia exhibit significant variability – and tend to be reflected in its share price in the short term. This provided us with an opportunity to take a longer-term view of the company and purchase shares when grades were depressed.
Webjet (neutral impact) announced that it has secured additional funding, which will allow it to capitalize on the weakness of the travel sector. Additional funding has been secured by way of a convertible note, with what we assess as terms that are favorable. These terms include a low-interest rate and a conversion price at a 20% premium to the current stock price. While the additional funds will allow for the retirement of some existing debt and provide headroom for the company if the return to travel is slower than anticipated, they will primarily be used to continue to grow the business by acquisition and bolster the company’s technology platform.
Paladin Energy (positive impact) provided greater detail around its planned restart of operations. The company has provisioned for a conservative restart program, which will rely on the processing of existing stockpiles as production ramps up in the initial year with an expected mine life of 16 years thereafter. Restart costs remain low compared to its peers and are consistent with those outlined its pre-feasibility study. The company has begun to see interest in contracting at price levels it sees as attractive, however, is disciplined in looking to contract at prices that generate an appropriate return to shareholders. It remains well-positioned to benefit from a continued improvement in prices.