How Changing Gold Scenario Can Be Advantageous To Gold Miners, A Look At ASX: RSG

  • Apr 08, 2019 AEST
  • Team Kalkine
How Changing Gold Scenario Can Be Advantageous To Gold Miners, A Look At ASX: RSG

Gold prices are moving in a range amid mix sentiments in the global economy. The weak earnings in the United States coupled with the progressive trade talks between U.S-China to end long-standing bilateral disagreement between two significant economies are pulling strings in gold.

The Gold spot (XAU) is moving in a range from $1280 to $1300 over last few trading sessions, with various ups and down emerging in the range amid global events such as the Brexit issue, U.S-China trade talks, Eurozone crisis, etc.

In the recent scenario, gold prices soared from the level of $1284.59 (Day’s low on 5th April 2019) to the present level of $1297. The jump in gold prices toward the upper band of the range was due to the fall in the dollar prices. The dollar index fell from the level of 97.47 (Day’s high on 5th April) to the present level of 97.32 amid the adjustment to weak earnings in the domestic market despite low unemployment.

The U.S. Weekly Unemployment Claims declined to 202k for the last week of March against the market expectation of 215k and previous month’s level of 212k. The fall in unemployment exerted pressure on gold prices previously, and gold slipped till approx. $1284 (as on 5th April).

Although, Unemployment Rate remained steady at 3.8% for March, but a decrease in Average Hourly Earnings in the domestic market coupled with no improvement in unemployment rate denoted slow conditions in the U.S. domestic economy and exerted pressure on dollar prices. The Average Hourly Earnings in the U.S. declined to 0.1% in March against 0.4% in the previous month.

With economic conditions in the United States presenting looming signals again, gold prices are extending gains. In the backdrop of this, a gold miner on the Australian Stock Exchange just presented the production update for March quarter.

Resolute Mining Limited (ASX: RSG) announced production update for March quarter on 8th April 2019. As per the company, the gold production for March 2019 quarter was at 98,105 ounces of gold, up by 33% as compared to the production in December 2018 quarter, which was at 24,414 ounces of gold.

As per the company, the gold production from its Syama prospect surged by 50% to 84,552 ounces of gold in the March 2019 quarter, which also marked the site record for quarterly output.

The high production requires either high-grade from quality projects or high reserves through extensive exploration. As per the company, its high production was mainly due to the high grade of gold from its new mine at Tabakoroni and above budget recoveries achieved from accelerated mining at the Syama satellite operation, which provided the high-grade ores to the Syama oxide mill and allowed the company to stockpile significant oxide ores.

The Ravenswood prospect of the company produced 13,554 ounces of gold, which is down by 22% as compared to the December 2018 quarter. However, the high production from the Syama prospect indemnified the slight production loss caused by the limited ore supply from Mt Wright and regional weather impacts.

As per the company, it is well on its path to reach the production guidance of 300Koz of gold for the financial year 2019 with an All-in-sustaining-cost of A$1280 per ounce. Resolute Mining recently presented its annual ore reserves and mineral resources statement.

With gold prices changing the trend and moving towards the upward range limit, high production could be advantageous for the company to realize high sales proceeds and strengthen its balance sheet.

The stock of the company closed the day’s trading at A$1.255 (as on 8th April 2019), up by 7.73% as compared to its previous close.


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