Research Note - Signal Gold Inc. (SGNL:TSX,$0.34|BUY $2.10 TARGET) - Point Rousse Cashflows Continuing Roll In – Funding Goldboro
This morning, SGNL reported Q3/22 financial and operating results from the Point Rousse operation. As previously reported on October 18th, the Point Rousse operation had an in-line quarter despite a small miss on production due to a scheduled maintenance shutdown. From a financial standpoint, the operation had a strong quarter with gold sales of 5.6 Koz vs. 4.1 Koz in Q2, costs in-line with Q2 and the operation continuing to generate cashflows. We are pleased with the quarter as Point Rousse is doing what it was supposed to, which is providing non-dilutive cashflow to develop the Goldboro Project. We are maintaining our BUY rating and our $2.10/share target price for SGNL.
Cash costs for the quarter came in at US$1,108/oz vs. our estimate of US$946/oz and an AISC of US$1,375/oz vs. our estimate of US$1,330/oz. The Company generated a revenue of $12.7M and reported $3.9M in operating cash flow during the quarter up from $2.5M in Q2 and in line with our estimate of $4.0M. The Point Rousse Project generated an EBITDA of $4.5M, based on gold sales of 5.6 Koz Au at an average gold price of C$2,258/oz.
The Company also continues to invest in key growth projects by spending $2.2M on exploration and evaluation with $1.9M relating to the advancement of the Goldboro Gold Project.
As of September 30th, 2022, SGNL had a cash balance of $12.2M and additional available liquidity of $3.0M from an undrawn revolving line of credit facility.
As reported on October 25th, the Point Rousse operation is to be placed under a care and maintenance program upon completion of mining at the Argyle Mine. This decision was driven by the operational and execution risk of developing the previously planned Stog’er Tight Project.
2022 Guidance: As previously reported, SGNL released production guidance for 2022 of between 20.0 and 21.0 Koz Au reflecting a near-record year of production.
Goldboro Project: As previously reported and discussed in our note published on August 3rd, SGNL announced it has received conditional approval for the Environmental Assessment (EA) for the Goldboro Project in Nova Scotia. The Company was advised by the Nova Scotia Minister of Environment and Climate Change that the Goldboro Project has been approved in accordance with the Environmental Assessment Regulations, subject to the terms and conditions outlined in the EA.