PNR delivered a weaker September Q with 10.6koz production at an AISC of $1,526/oz (vs guidance of 12-14koz @ $1,250/oz). The result was below expectations and impacted on a number of fronts, including reconciliation issues against the ore model on the periphery of the Wagtail open pit cutback and lower throughput. Production at Nicolsons is now looking more like a ~50kozpa operation longer term versus our prior estimates of 67-75koz. Whilst this is a disappointing result, a key positive is that PNR is focussed on maximising cashflow over higher production. A review to optimise production is underway which we think will result in campaign mining of Wagtail & Nicolson in order to more effectively manage the mine plan. We reduce our target price to $0.22ps (prior $0.30ps) and move to a HOLD recommendation pending the outcome of the optimisation study.
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