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The recent dovish stance by the Federal Reserve amid concern over the global slowdown led it to adopt a wait and watch policy, which in turn exerted the pressure on dollar prices and thus providing supported to the gold prices. The U.S. bond market jolted as well over the dovish attitude of the FED. The higher gold prices can further lead to a higher average sale price for the mining companies listed on ASX and thus, in turn, could be a valuable pick at the time of rising gold prices. The company with higher production capability and good sales volume would be able to take a better position in the market.
Are Companies on ASX ready to reap benefits of high gold prices?
Evolution Mining Limited (ASX:EVN) announced its first half-year results on 13th February. As per the company, (as on 13th February) spot gold price is at A$155/oz which is higher as compared to the previous first half. The statutory profit before tax for the H1 FY19 was A$ 132.1 million, down as compared to A$ 175.1 million in H1 FY18 and statutory profit after tax was A$ 91.1 million, down as compared to A$122.5 million in H1 FY18.
The EBITDA for the H1 FY19 noticed at A$ 359.7 million, which was down as compared to A$ 399.1 in the first half of the previous year. The Earnings per share also declined to 5.3cps as compared to 7.2cps in H1 FY 18. However, the fully franked interim dividend remained unchanged at 3.5cps.
As per the company, the profit decline was driven by non-cash impact items, which accounted for A$32.2 million and cash impact item totalled at A$ 11.3 million and the company said that it is planning to perform better in the H2 FY19
The production target of the company for FY19 to FY21 for gold production is in between the range of 720â770 in FY19, 725â775 in FY20 and 710â765 in FY21.
The Share price of EVN was quick to react over the decline in EBITA and net profit and share price of the company (as on 13th February) opened at A$ 3.750 and closed at A$ 3.800 with a low of A$3.720 and decreased successively to make a low of A$ 3.680 on the following trading session.
The stock closed the dayâs session at A$3.650, down 3.95% on 21 February 2019.
Regis Resources Limited (ASX:RRL) has recently announced its half-year financial result for the period ended on 31st December 2018 with a revenue of $317.2 million with 186,276 ounces of gold sold with an average price of $1,696 per ounce.
The company reported a net profit after tax of A$79.9 and posted an EBITDA of A$ 146.4 million with a 46% EBITDA margin. The company also declared a fully franked dividend of 8cents(cps) per share.
The stock settled at A$5.530 (as on 21 February 2019), down by 3.99% from its previous close of A$5.760. During the dayâs trading session, the stock made a high of A$ 5.710 with an average volume of 2,725,110. Â Â The share price of RRL is on the rise amid the high price of gold combined with good half-year financial results, with positive return of 8.07% over last 5 days, as on 20 February 2019.
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