How Are Gold Prices Catapulting Gold Miners On ASX?

How Are Gold Prices Catapulting Gold Miners On ASX?

Gold prices surged amid fall in dollar prices, with gold spot (XAU) rose from the level of $1280.93 (which marked the day’s low on 7th March) to the level of $1300.80 (day’s high on 8th March) and U.S. Dollar Index (DXY) plunged from the level of 97.71 (which marked the day’s high on 7th March) to the level of 97.25 (day’s low on 8th March). The fall in dollar prices, which was noticed in the wake of weak employment data, supported the gold prices.

The Bureau of Labor statistics department reported a net increase of 20k in the non-farm employment jobs, whereas the market participants estimated it to rise around 180k. The significant drop in an increase in jobs exerted tremendous pressure on dollar prices and in turn, supported the gold prices.

However, the gains were quick to halt at the level of $1300, over the building optimism among the market participants on U.S-China trade talks.

How Gold Miners Reacted on ASX:

EVN: Evolution Mining Limited (ASX: EVN) share prices reacted quickly over the rise in gold prices and the shares marked a surge from the level of A$3.450 (day’s low on 8th March) to the level of A$3.650 (day’s high on 11th March). The recent 19.9% acquisition of the East Kundana mining operations also uplifted the swing of the rising share prices.

The company produced 878koz of gold from its Cowal projects since the acquisition of the project and aimed its FY19 production guidance to be in the range of 240koz-250koz, with AISC in the range of US$705—US$780 per ounces of gold production. Likewise, the company aimed for different FY19 production guidance from different gold projects.

The Outlook of the company:

Evolution Mining is keeping an emphasis in Australia for the current production and is evaluating North America for future exploration projects. The company is continuously improving the quality of its portfolio and playing the individual part such as increasing annual production, reducing AISC, extending mine life concisely. The production outlook, which looks steady might help the company to emerge as a level player and position it strongly, to take advantage of high prices, as when they emerge on commodities scenario.

SBM: St Barbara Limited (ASX: SBM) share prices response correlated to the gold prices and soared from the level of A$4.150 (day’s low on 8th March) to the level of A$4.495 (day’s high on 9th March). The company is focused on strong margin gold operations and is currently having Leonora and Simberi operations. Recently, St Barbara inked a forward gold contract, which will provide a hedge against the price fluctuations.

The company is well focused on developing the existing ore sources to supplement the production from its Gwalia mine and Simberi island resources, which is operating on a mining lease 136 and 609.

The most challenging part for any gold miner is to replenish the mined gold reserves, and in order to overcome with the problem, the companies which can spend more on exploration projects to replace the lost ore can find themselves in the better position to lock in the streams of future cash flow and take advantage of the commodities price cycles over the long run.

Apart from the companies mentioned above, various other companies such as Alacer Gold Corporation looks ready to leap over the current commodity scenario. However, the entire course will be decided over the production capabilities of the companies and their future endeavours to explore and expand over the long run.


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