Capricorn Metals (ASX: CMM) shares defy market weakness as 1HFY23 profit before tax rises 13%

Highlights

• Capricorn Metals Limited (ASX: CMM) released its half-yearly results ended 31 December last year on Friday.
• In 1HFY23, the company’s profit before tax rose by 13% to AU$58.3 million against AU$51.8 million in pcp.
• For FY23, gold production at the Karlawinda Gold project is anticipated to be within the guidance range of 115,000 – 125,000 ounces.

ASX 200 gold miner Capricorn Metals Limited (ASX: CMM) released its half-yearly results ended 31 December 2022 on Friday, 10 March 2023. The stock reacted positively to this earnings announcement and traded 2.26% higher at AU$3.835 per share, outperforming market benchmark ASX 200 index, which was down 2.29% at around 3:20 pm AEDT.

Let’s scan through CMM’s interim results.

Capricorn Metals 1HFY23 financial results

During the reported period, the company’s profit before tax rose by 13% to AU$58.3 million against AU$51.8 million in pcp. This was driven by robust operating performance at the Karlawinda Gold Project with gold production increasing by 10% to 60,315 ounces versus 54,645 ounces in pcp and robust cost control amid industry-wide inflation.

However, the company’s net profit after tax declined to AU$40.16 million for the reporting period as compared to a net profit of AU$51.8 million in pcp. This was because of tax expenses of AU$18.17 million compared to nil tax payment in pcp.

Gold revenue of the company rose 16% to AU$145.4 million, with gold sales of 56,218 ounces at an average delivery price of AU$2,587 an ounce. An additional 5,196 ounces of bullion on hand was sold in January this year for AU$13.9 million, the company said.

For 1HFY23, EBITDA rose to AU$74.8 million, up from AU$72.3 million in pcp, and EBITDA margin was 51%, supported by the lowest quartile Australian gold industry AISC of AU$1,105 an ounce.

On 31 December last year, CMM had a cash balance of AU$77.8 million, growing from AU$61.5 million as on 30 June 2022.

No distribution by CMM’s board was declared during 1HFY23.

Capricorn Metals 1HFY23 operating results

During the reported period, at Karlawinda Gold project, a total of 2.18 million tonnes of ore was processed at a head grade of 0.92g/t. The mill feed in 1HFY23 was a combination of laterite, oxide and transitional ores.

At Mt Gibson Gold project, a total of 50,903 metres of drilling (397) activity was conducted throughout the MGGP (comprising sterilisation drilling) in 1HFY23. The total drilled metres were 138,246 metres for 957 holes for one year period ended 31 December last year.

In November last year, CMM notified an updated Mineral Resource Estimate based on the results of drilling to date. Mineral Resource Estimate rose 32% to 104.9Mt @0.8g/t Au for 2,755,000 ounces of gold.

Capricorn Metals FY2023 outlook

For the current fiscal, gold production at the Karlawinda Gold project is anticipated to be within the guidance range of 115,000 – 125,000 ounces with all in sustaining costs (AISC) within the guidance range of AU$1,160 to AU$1,260.

At the Mt Gibson Gold project, hydrological exploration and testwork began at the MGGP with initial testwork recognising many positive flow sites, which will aim for production water bore installation in 2HFY23. The first reserve estimate is anticipated to be released during the March quarter of this year.