Beadell plays down guidance disappointment

Beadell Resources (BDR) recorded it first rise in six sessions with the bounce in the gold price lending support to the Brazilian-focused gold miner.

Beadell Resources (BDR) recorded it first rise in six sessions with the bounce in the gold price lending support to the Brazilian-focused gold miner.

The stock added 3.5 cents, or 5%, to 74 cents at the close on Thursday as the spot gold price firmed slightly to $US1262.50 an ounce.

But it’s not the volatile gold price that has kept the stock on the back foot over the past week. Investors had shunned the stock since Beadell released its latest quarterly report with a 2013-14 full year production guidance of 190,000 to 210,000 ounces of gold at a cash cost of between $US535 and $US585 an ounce.

Management’s forecast was a shock to the system for investors as the market was looking to the miner to produce 225,000 ounces of the yellow metal. Costs are also rising as Beadell managed to produce an ounce of gold for $US470 in the December half of 2013.

The higher costs were not unexpected and still puts Beadell among the world’s lowest cost gold producers, while Beadell’s managing director Peter Bowler, played down worries about the lower than expected production guidance.

“Our latest production report is really solid. We are making a lot of cash and we are looking to paying down our project debt in record time,” Bowler tells Eureka Report.

“I think some analysts misjudged the guidance for this year at 15% to 20% higher than [our estimates], but they could very well be proved correct dependent on further positive news coming out of Duckhead.”

Duckhead is Beadell’s flagship project, which is a high-grade but relatively short-life mine. Beadell believes there is more gold to be found in the area and has embarked on a drilling campaign to extend the life of the mine.

Analysts are not perturbed by the weaker than expected guidance. Canaccord Genuity, for instance, believes Duckhead will add 20,000 to 40,000 ounces of gold to management’s guidance and is anticipating full year production to meet current consensus estimates.

We highlighted the attractiveness of Beadell on August 28, and we remain convinced that Beadell is the best placed ASX-listed gold producer.

Beadell is part of the Uncapped 100. 

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