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Analys Kopy Goldfields: Higher gold a timely boon?

Detta är en betald analys på uppdrag av Kopy Goldfields utförd av analysföretaget Jarl Securities på uppdrag av Analysguiden.

Kopy Goldfields have finalized the sales agreement for the Kopylovskoye asset. Currently, it is marketing the Krasny project to external buyers. A higher gold price has improved project economics for Krasny. We raise fair value.

Following a successful rights issue in the autumn of 2018, the gold explorer Kopy Goldfields is currently marketing the flagship project Krasny (49 per cent ownership) to external buyers. Recently, a sales agreement has also been finalized for the smaller Kopylovskoye asset for up to USD 6m. In December 2018, Kopy received an upfront payment of RUB 8m (about SEK 1.1m). Future payments are related to production mile stones to be reached before the end of 2021.

While Kopy’s partner in Krasny, GV Gold, in September 2018 stated that Krasny did not fit in the Russian miner’s development plans currently, it has recently acquired a nearby greenfield project. This might possibly signal a change of strategy, as the market for acquiring already producing assets is severely hampered by U.S. sanctions against Russian oligarchs (several of the producing gold mines (GV Gold being an exception) have ownership ties with oligarchs). This in turn might lead renewed interest from GV Gold for Krasny, possibly facilitating an exit for Kopy Goldfields. This as we view GV Gold as the most natural buyer of Kopy’s stake in Krasny.

As both the gold price and the U.S. dollar has strengthened recently, project economics for Krasny has improved markedly, in our view. Consequently, we raise fair value for Kopy Goldfields. In our base case scenario, we derive a risk adjusted value of SEK 3.41 per share, up from SEK 3.04. Kopy Goldfields has limited financial resources and might have to raise further capital in 2019 if reaching a deal for Krasny takes longer time than expected or does not come through. In our base case scenario we have considered a possible capital raise in the second half of 2019. Thus, there could be upside to our valuation if a sale can be completed sooner.  

Författare Niklas Elmhammer