Hi there,
My apologies for the delay in response. Wesdome is a junior producer and not one that i am overly familiar with so it took longer to do a little research.
First let's start with some of the things that make the company attractive:
- No debt
- Strong free cash flow generation
- Rising production
- Operations in safe jurisdictions
In fact, I quite like what i see with the company. Production guidance isn't going to know your socks off (3.6% growth in 2020) and the company doesn't appear to provide any clarity further out. However, I appreciate the company's slow and measured approach to growth. It has ample of opportunity to grow production at a low to mid-single digit rate within exisitng properties. This leads to lower CAPEX requirements, and strong cash flows.
In an environment where the price of gold is rising, it makes for an excellent combination.
There will be some short term headwinds however as mines in Ontario and Quebec were put on care and maintenance. This may impact production, and we may see the company pull 2020 guidance. This is not unique to Wesdome and has impacted gold producers worldwide.
The company's AISCs are mid-pack in the high 900s. In 2019, AISCs dropped by $10 per ounce, but it was based solely on the exchange rate. In CAD, AISC actually increased YOY.
The company has been one of the most prolific gold stocks of the past year as it gains 172%. However, the meteoric rise means it is now trading at pretty hefty valuations. At 35 times forward earnings and 9 times sales, it is well above the industry average (FP/E of 19 and PS of 4.4).
Considering the company's modest growth profile and the fact it has a habit of missing analysts estimates (10 out of the past 12 quarters it missed), Wesdome seems priced to perfection.
Not a bad little company, but in my opinion is trading at pretty hefty valuations.
Mat