Revenue in the 1HFY2025 increased 78.0% y-o-y to US$52.8 million, which Chan notes is the “highest in any half-year period since CNMC’s inception”.
As at June 30, the company has US$37.3 million in net cash, which Chan notes is a “record amount”. This accounts for 62% of its net asset value.
With this set of results, CNMC proposed a dividend of 1.5 cents per share for the 1HFY2025, some three times the dividend payout of 1HFY2024’s 0.4 cents.
To further the company’s competitive positioning, it has completed a major upgrade of its processing infrastructure in early 2025, expanding the carbon-in-leach (CIL) plant's capacity by 60% to 800 tonnes of ore per day.
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Additionally, CNMC is also constructing a second underground mining facility at Sokor to tap higher grade gold ore zones.
Chan writes: “Once completed, the new underground mine is expected to supplement production volumes and potentially increase the average ore grade mined, thereby raising overall gold output. The combination of expanded processing capacity and new mining fronts gives CNMC a platform for organic growth in the coming years.”
Importantly for CNMC, the analyst notes that the price of gold has been on a strong upward trajectory, with forecasts from financial institutions projecting it to remain elevated or to even “reach new highs” in the near-term.
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He writes: “Ongoing geopolitical tensions in Europe and the Middle East, coupled with global trade uncertainties have driven investors to seek safe-haven assets.”
The anticipated monetary easing cycle by the US Federal Reserve (US Fed), he adds, and a general softening of the US dollar also make non-yielding assets like gold more attractive.
“Furthermore, central banks globally have been consistent buyers of gold, reinforcing its status as a store of value and an inflation hedge in an environment of increasing sovereign debt and economic uncertainty,” writes Chan.
One potential risk noted by him is a volatility in gold prices, with a sharp decline in gold prices likely prompting a re-evaluation of CNMC’s fair value thus leading to underperformance. Other risks include operational risks related to mining activities, regulatory and environmental risks and foreign exchange risks.
Chan, keeping “buy”, concludes: “Given CNMC’s strong earnings momentum and increased gold production and higher gold prices, we lifted our FY2025 and FY2026 net profit forecast to US$39.3 million and US$45.8 million, respectively.”
Shares in CNMC closed 1 cent lower or 1.29% down at 76.5 cents on Sept 4.
