BGL’s 2QFY25 preliminary result was weak with gold sales 15% lower than we had forecast. Production guidance for FY25 has been downgraded by 8-9% as a result and we have lowered our forecast by 7%, with our estimate towards the bottom end of the new guidance range. Realised gold prices in the 2QFY25 were 18% below spot, with BGL delivering nearly all output into its hedge book. We estimate BGL’s spot exposure in the 2HFY25 at ~35% of total gold sales. Despite the downgrade to the outlook, BGL’s new guidance implies gold production will double by the 4QFY25, at which point we expect strong free cash flow generation. Improving underground development rates remains the key risk to achieving its production targets. We reiterate our BUY rating but lower our price target by 11% to reflect the weak 2QFY25 and cut to FY25 guidance.
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