The junior gold producers hitting the ball out of the park
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Gold prices have been on a tear as investors seek refuge from the market panic brought about by the COVID-19 pandemic.
Spot gold has climbed 9.6 per cent since the beginning of this year to its current price of $US1,675.55, or about $2,594 in Australian dollar terms, per ounce with prices testing a high of $US1,734.41 per ounce last month.
With quarterly reporting season on us, Stockhead is taking the opportunity to review how some of the sub $1bn market cap gold producers have performed in the March quarter.
|Company||Code||Production in Ounces (Quarter)||Cash Cost per Ounce||AISC|
|Alacer Gold Corporation||AQG||87,863||US$700|
Alkane Resources (ASX:ALK) is now producing gold at a steady state from its underground Tomingley operation, with the company selling 3,864 ounces of gold to generate revenue of $8.2m in the March quarter.
The company has maintained its guidance for the 2020 financial year at 30,000 to 35,000 ounces of gold at an all-in sustaining cost (AISC) of between $1,250 and $1,400 per ounce.
Alkane is also accelerating its plans to develop the Roswell and San Antonio deposits.
Alacer Gold’s (ASX:AQG) AISC of $US700 per ounce is below its previous guidance of $US735 to $US785 per ounce, allowing the company to generate $US47m of unlevered free cash flow.
The company expects to produce between 310,000 and 360,000 ounces of gold this year at an AISC of between $US735 and $US785.
Beacon Minerals (ASX:BCN) enjoyed record gold production of 6,905 ounces in the March quarter, with gold sales of 5,033 ounces generating $11.8m in cash receipts.
The company expects cash costs, excluding royalties, to fall from $1,080 per ounce in the March quarter to $1,000 per ounce in the June quarter.
Production from its Jaurdi mine is expected to be about 6,900 ounces for the June quarter.
Medusa Mining (ASX:MML) has reduced its cash costs from $US801 per ounce in the December quarter to $US657 per ounce in the March quarter.
Likewise, AISC is down from $US1,346 per ounce in December to $US1,118 per ounce in the March quarter.
Production guidance for FY2020 remains between 95,000 and 105,000 ounces of gold at an AISC of between $US1,025 and $US1,125 per ounce.
OceanaGold Corporation’s (ASX:OGC) results for the March quarter will not be available until May 15.
However, the company produced 108,200 ounces of gold in the fourth quarter of 2019 at an AISC of $US980 per ounce.
Red 5’s (ASX:RED) quarterly production was impacted by short-term crusher and ball mill performance issues at the Darlot Gold Mine and lower grades than planned at the King of the Hills underground mine.
However, production has not been impacted by the COVID-19 pandemic.
Output is expected to recover in the June 2020 quarter, with an expected range of between 26,000 ounces and 30,000 ounces at an AISC of $1,400 to $1,525 per ounce.
Mine operating costs incurred during the quarter were $800 per ounce, up from $610 in the December quarter.
The company expects average annual production from Sanbrado over the first five years of 217,000 ounces of gold at AISC of less than $US600 per ounce and about $US650 over the initial 10-year mine life.
Notably, year one is anticipated to see the production of over 300,000 ounces from underground and open pit ores at an AISC of less than $US500.