Doray Minerals (DRM) reported Dec Q production from its Deflector Mine with 19koz Au and 660t Cu at an all-in sustaining cost (AISC) of A$1,354/oz (versus 19.75koz @ A$1,251/oz in the Sept Q). FY19 copper and gold production is tracking well to achieve stated guidance of 80-85koz at an AISC of A$1,050-1,150/oz. Stoping of the Link Lode commenced in the low-grade areas so the full benefit of high-grade ores won’t be seen until the 2H as mining moves into higher-grade zones. Mill throughput was -8% QoQ due to a mill reline as well as mining delays due to an underground fire. Cash and equivalents fell to $21.6m, reflecting further repayments in debt which has been reduced to $9.5m (-$5.7m QoQ). DRM trades on appealing metrics of ~3x FY19 EV/EBITDA and the near-term merger with SLR is appealing for a stronger balance sheet flexibility, production growth and the removal of single asset risk. BUY maintained and target price of $0.47ps.
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