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If you look closely at the top gainers on ASX in the past few days, you will find that most of these are gold companies. Several gold stocks have continued to perform well on exchange despite the uncertainty around the Coronavirus outbreak.
Many analysts believe that local gold producers of Australia are benefiting from a lower Australian dollar. If compared to the U.S. currency gold price, the Australian gold prices are at a better level, which is a reason why ASX gold stocks are performing well on exchange.
Many analysts also believe that the pledge taken by the Federal Reserve to stabilise the financial system might have boosted the confidence in the investors. Federal reserve has recently promised a range of credit for households, small and major firms to provide relief in the current challenging times.
In the light of the present scenario let us take a look at a few gold stocks and how they have been performing.
Resolute Mining Limited (ASX: RSG)
Australian gold producer, Resolute Mining Limited (ASX:RSG) has a unique skill set and reputation in Africa and is primarily involved in the development of resource projects and prospecting and exploration for minerals.
On 26 March 2020, the company provided a business update, wherein, it informed that its gold production has not been impacted by government-regulated COVID-19 restriction and its mining and processing operations are continuing as normal at the Syama Gold Mine in Mali and Mako Gold Mine in Senegal. The company has also assured that it is taking range of additional measures to mitigate the spread of infection amongst its workforce and to provide a platform for business continuity.
The company recently secured flexible, low-cost funding by executing the documentation for a new flexible low-cost syndicated loan facility with a maximum limit of US$300 million which provides it with flexible low-cost debt under terms that are highly competitive for a senior debt facility of this type.
Saracen Mineral Holdings Limited (ASX: SAR)
Saracen Mineral Holdings Limited is a gold exploration company that has a market cap of around $3.86 billion.
The company recently assured the market that it has been pro-active in responding to the evolving crisis and is reducing its operating “footprint” in order to minimize the number of people at its workplaces and the interaction between them.
For the six months ended 31 December 2019, the company reported Underlying net profit after tax (NPAT) of 80.2 million, up 84% on the previous corresponding period (pcp), driven by the 45% jump in sales revenue to $409.9 million and increased gold sales of 206,277 ounces at an average sale price of A$1,984/oz. Over the period, the company’s EBITDA increased by 71% to $178.6 million and statutory NPAT increased by 61% to $69.1 million. Recently, SRG Global Ltd announced that it has been awarded a significant five-year, circa $70m contract with Saracen to provide services at Saracen’s Thunderbox and Carosue Dam operations, both located in Western Australia.
The company remains vigilant and prepared to take more extensive action should it be necessary to ensure the wellbeing of its people and those of its contract partners.
Northern Star Resources Limited (ASX: NST)
Northern Star Resources Limited is a global-scale Australian gold producer with portfolio of low-cost, high-grade underground gold mines. On 26th March 2020, the company announced that in response to the impact of COVID-19, it is implementing prudent financial measures to preserve the value of its business in the long term and these measures are creating unavoidable disruptions to normal operations and affecting gold production as a result of which the company’s outlook is becoming more difficult to predict. Due to this, the company has withdrawn its production and cost guidance for the year to June 30, 2020 and has decided to defer the payment of its interim dividend.
In the first half of FY20, NST reported a net profit of 126.8 million, which was 54% higher than the previous corresponding period. Further, the company reported EBITDA of $322.2 million which was 45% higher.
Key H1FY20 highlights include:
- Jundee and Kalgoorlie Operations continue to produce strong EBITDA margins of 64% and 41% respectively, they are expected to perform strongly in the second half of this financial year
- Solid cash generation helps fund strategic growth opportunities; 76% growth in Group operating cash flows and 179% in underlying free cash flow compared to pcp
- Pogo financial returns expected to lift in 2H FY2020 as the production inflection point was reached in the December quarter and forecasted to be a meaningful free cash flow generator to the Group
- Free cashflow expected to grow substantially with the addition of KCGM and higher gold prices
Newcrest Mining Ltd (ASX: NCM)
Gold exploration company, Newcrest Mining Ltd (ASX:NCM) recently adjusted its FY20 guidance to reflect the recently completed divestment of Gosowong, the commencement of commercial production at Fruta del Norte and the projections of all its operations, and in particular, Lihir.
The company has also expanded its interests within the highly prospective Paterson Province. The company recently signed an exploration farm-in agreement that establishes a joint venture with Antipa Minerals Limited (Antipa) to explore the Wilki Project area surrounding Newcrest’s Telfer operation, and within close proximity to Havieron.
For the half year ended 31 December 2019, the company had reported a Statutory profit of $236 million and Underlying profit of $280 million, driven by a higher realised gold price, lower depreciation expense, the favourable impact from the weakening of the Australian dollar against the US dollar.
Evolution Mining Limited (ASX: EVN)
Evolution Mining Limited reported a record half-year statutory net profit after tax of $147.2 million and record underlying net profit after tax of $149.1 million in the first half of FY20, underpinned by the half-year gold production from Evolution’s asset portfolio of 362,857 ounces at an All-in Sustaining Costs (AISC) of A$1,041 per ounce. On the back of strong half-year financial performance, the company declared a dividend of 7.0 cents per share fully franked, which is double than the dividend announced in pcp, reflecting the consistent dividend program of the company.
On 12 February 2020, the company released the Annual Mineral Resources and Ore Reserves (MROR) estimates of its assets, which reflected the delivery of significant growth and further upside opportunity at its long life, low cost assets.
For FY20, the company expects to report a group production of around 725,000 ounces of gold with AISC expected to be in the range of AA$940 – A$990 per ounce. From Cowal, the company expects to have a Gold production of around 255 – 265koz. From Ernest Henry, it expects Gold production of 87.5 – 92.5koz and copper production of 19-21kt with AISC to be in between A$590 – A$540 per ounce.
The company recently announced Board Changes, as per which, Mr. Colin Johnstone has resigned from the position of Non-Executive Director and Ms. Vicky Binns and Mr. Peter Smith have been appointed as Non-Executive Directors effective 1 April 2020.
