Merdeka Copper Gold (IDX: MDKA) reported Dec Q production of 44koz Au at an AISC of US$702/oz at Tujuh Bukit (“TB”, -9% on production, +8% on costs QoQ). CY18 production was 168koz at an AISC of US$590/oz, at the upper end of production and lower end of cost guidance. At Wetar, production was 4kt Cu at an AISC of US$1.48/lb (-10% on production, -22% on costs QoQ) as a result of poor equipment availability and lower irrigation rates which is expected to be resolved during Q1CY19. The TB oxide 8Mtpa expansion project is largely complete with commissioning in Q1CY2019. Porphyry resource drilling continued with strong zones of mineralisation returned in the North Block of the Upper High-Grade zone (UHGZ). Overall, production was in-line with a number of initiatives in place to improve output in 1HCY19. MDKA trades on an undemanding EV/EBITDA of 8x, with the share price not reflective of the pipeline of assets in the development and exploration portfolio. BUY recommendation maintained and target price of IDR 6,473.
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