Gold miner is on a roll with strong production and costs well under control
Thursday 17 May 2018 Author: Daniel Coatsworth

Avesoro Resources (ASO:AIM) 272.5p

Gain to date: 0.9%

Original entry point: Buy at 270p (adjusted for consolidation), 8 June 2017


Our trade on the West African gold miner is back in the money after a disappointing period last year. The latest quarterly update confirms our original view that the business could be put back on an attractive growth path.

First quarter gold production of 68,088 ounces is considerably ahead of the run-rate to hit full year guidance of 220,000-240,000 ounces. Operating cash costs of $624 per ounce sold are near the bottom end of full-year guidance. And AISC (all-in sustaining costs) of $914 per ounce sold is well below full-year guidance of $960-$1,000 per ounce.

Chief financial officer Geoff Eyre admits that Q1 is likely to be the strongest quarter this year as it was driven by high-grade sections at its Balogo mine.

Its New Liberty mine is continuing to improve following a restructuring plan. Eyre says all-in sustaining costs should come down significantly once Avesoro has finished additional waste stripping at New Liberty in 2019.

As a business it is generating plenty of cash to pay down debt and to fund exploration on numerous targets, plus in-fill drilling to increase confidence over existing discoveries and extend mine life.

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