Pantoro (PNR) released its June Q report with production of 9.6koz at an all-in sustaining cost (AISC) of $1,662/oz, (-15% on production vs March Q of 11.3koz vs Argonaut 15koz) and full year FY19 production of 43koz at AISC $1,434/oz (vs 50koz guided). Production was impacted by open pit pre-strip delays and equipment availability at Nicolsons. The setbacks were exacerbated as the issues occurred at during a planned 6-day mill shutdown which resulted in a cash outflow of $3m for the Q. Sept Q guidance should see production rebounding +25% QoQ to 12-14koz @ AISC $1,100-$1,250/oz as Wagtail open pit and Wagtail North underground commence production. Norseman drilling is due to commence in late July which will target around 1Moz of Resources at six key areas with a view to converting into Reserves in the near term. PNR trades on an undemanding 4x FY20 EV/EBITDA and 10x FY20 P/E which is cheap vs its gold producer peer group. With improved production at Nicolsons and a strong pipeline of drill results from Norseman, we expect the stock will re-rate going into the Sept Q. BUY maintained and target price of $0.30ps.
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