Lens on 3 Gold stocks as the yellow metal continues to draw investor attention- OGC, GOR, NCM

  • Jul 19, 2020 AEST
  • Team Kalkine
Lens on 3 Gold stocks as the yellow metal continues to draw investor attention- OGC, GOR, NCM

Summary

  • Gold spot prices have crossed back over the US$1,800.00 per ounce, reflecting a window of better business prospects for the gold miners.
  • In the June quarter, OGC undertook proactive steps to increase cash reserves.
  • Saracen Mineral Holdings Limited resumed its operations at Carosue Dam in Western Australia.
  • NCM wrapped up equity raising comprising of A$200 million share purchase plan and institutional placement of A$1.0 billion.

While diversifying an investment portfolio, gold happens to be a prominent asset class, as it is respected for its value around the world. In general, the price of gold increases when market events cause a decline in the value of paper investments such as stocks and bond. A drop in the Australian dollar also leads to a rise in the value of gold. However, investment in gold has its own merits and demerits. 

People invest in gold to save themselves from any upcoming disaster such as financial depression as demand for gold is less sensitive to market developments and appreciates in the long term. Investing in gold also provides protection against inflation. In addition, investment in gold coins or gold bullion provides easy decision making as compared to picking the right stocks or property for investment.

However, there are many cons as an investment in gold provides no yield, low capital gains and, there are storage issues and the charges by the dealers.

Recently, gold spot prices have crossed back over the US$1,800.00 per ounce, reflecting a window of better business prospects for the gold miners. On that note, we will be having a look at some of the ASX-listed gold companies with their recent updates to the market:

OceanaGold Corporation

OceanaGold Corporation (ASX:OGC) is a mid-tier, high-margin, multinational gold producer with assets located in the Philippines, New Zealand, and the United States. Recently, the Company notified the market with status of legal proceedings in the Philippines. In the month of July 2019, OGC applied for an injunction in the Philippines Court of Appeals as a temporary measure to allow interim operations of the Didipio Mine. The Company got information through social media about the denial of injunction appeal by the Court of Appeals. However, the Company has not received any formal order from the Court of Appeals and is seeking confirmation.

Do Read: Momentum in Gold stocks amid COVID-19 Crisis.

Decent Quarterly Production

  • During Q1 FY20, consolidated gold production stood at 80,707 ounces at consolidated All-In Sustaining Costs of US$1,218 per ounce on sales of 91,388 ounces of gold.
  • During the quarter, the Company reported revenue and EBITDA amounting to US$138.2 million and US$42.4 million, respectively. 
  • Operating cash flow for the period stood at US$120.6 million with full diluted cash flow per share before working capital of US$0.07 and US$0.19 per share inclusive of gold presale.
  • The Company undertook proactive steps to increase cash reserves, including drawdown of the remaining US$50 million on the revolving credit facility, US$78.5 million gold presale, and US$22.7 million divestment of a non-core equity position.
  • The Company ended the quarter with the available liquidity of US$177.4 million and net debt decreased from US$179.4 million to US$121.1 million. 

At the close of session on 17 July 2020, the stock of OGC stood at A$3.310 per share with a decrease of 0.301%. The stock of OGC has generated returns of 6.75% and 54.42% during the last one and three months, respectively.

Saracen Mineral Holdings Limited

Saracen Mineral Holdings Limited (ASX:SAR) is engaged in the exploration and production of gold. Recently, the Company announced that operations have resumed at Carosue Dam Operations in Western Australia. The Company is currently reviewing principal hazards and controls, conducting workplace inspections and audits, and developing a return to work plan in order to ensure stoping activities at Carosue Dam Operations can safely resume in the coming days. The Company has also provided operation and financial information for the quarter ended June 2020 and outlined the following:

  • For the quarter ended June 2020, the Company reported gold production of 145,830 ounces and production for FY20 stood at 520,414 ounces, which surpassed the guidance of 500,000oz.
  • During the quarter, gold sales stood at 148,011oz at an average sale price of A$2,280/oz for sales receipts of A$337.5 million.
  • As of 30 June 2020, the cash and bullion of the Company stood at A$369.3 million after making a debt repayment of A$38.5 million, tax payment of A$15.7, and spending around A$89 million -$94 million on growth capital and exploration.
  • The Company closed the quarter with the net cash balance of A$48 million.

At the close of session on 17h July 2020, the stock of SAR stood at A$5.890 per share with a fall of 0.856%. The stock of SAR has generated returns of 25.86% and 36.13% during the last one and three months, respectively.

Newcrest Mining Limited

Newcrest Mining Limited (ASX:NCM) is involved in the exploration, development, mining and the sale of gold. Recently, the Company announced that Roger John Higgins had made a change to holdings in the Company by acquiring 1,172 ordinary shares at the consideration of A$25.60 per share on 5 June 2020. In a recent exploration update, the Company stated that step out drilling had expanded the footprint of mineralisation with hole HAD066 drilled 220m north-west of previous drilling intersecting 82.1m @ 2.4 g/t Au and 0.08% Cu at Havieron Project. Also, the infill drilling at Red Chris has affirmed continuity of high grade within East Zone.

The Company has also finished a share purchase plan and raised around A$200 million following the successful completion of a A$1.0 billion placement to institutional investors.

At the close of session on 17 July 2020, the stock of NCM stood at A$32.780 per share with a drop of 0.395%. The stock of NCM has generated returns of 8.11% and 12.17% during the last one and three months, respectively.

 


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