Source: Phongphan, Shutterestock
- Rising production levels and commodity prices have fuelled the growth of Gold stocks.
- Gold stocks can be an immaculate solution to take indirect exposure in physical Gold.
Chaarat Gold Holdings Ltd's (LON: CGH) latest results reveal that the firm has moved into profits in 2020, driven by the increased production in its Kapan mine located in Armenia. During the second half of 2020, the Gold miners were benefited by increased production, rising commodity prices, and so did Chaarat Gold Holdings. The precious metal miner’s revenue was up by 12.5 per cent to US$76 million in 2020.
Due to significant improvement in operating performance at Kapan and lower overhead costs at both corporate and Kyrgyz Republic level, the company’s witnessed an EBITDA of US$9.3 million in 2020 (2019: loss of US$12.8 million). Despite the unprecedented challenges posed by the pandemic, the miner managed to achieve an operating profit of US$1.9 million in 2020, compared to a loss of US$18.4 million in 2019. By the end of 2020, the miner’s cash balances soared to US$6.9 million (2019: US$3.6 million).
The precious metal miner proactively raised an equity capital of US$13.8 million to strengthen its balance sheet in 2020 during the first wave of the pandemic. This move by the company helped it reduce the gross debt and interest costs. Shares of Chaarat Gold have yielded a price return of 7.10 per cent since January so far. Chaarat Gold has a market capitalization of over £175 million.
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Let us put our lens at some other Gold stocks listed on the LSE.
Fresnillo Plc (LON: FRES)
FTSE 100-listed metals & mining business Fresnillo reported a strong financial performance as it announced an increase of 14.9 per cent year-on-year to US$2,608.1 million in Adjusted Revenue in 2020, driven by higher gold and silver prices.
During the FY2020, both gross profit and EBITDA rose by 90.5 per cent and 73.4 per cent increase year-on-year to US$879.4 million and US$1,169.1 million, respectively. The company recommended a final dividend of 23.5 US cents per share for the year 2020. Notably, the annual dividend yield of the company stood at 2.6 per cent, is at par with the sector.
Due to vicious nature of the Covid-19 pandemic prevalent in Mexico, Fresnillo is expected to take a more prudent approach for 2021. Fresnillo expects attributable production in the range of 675 to 725 koz of gold and 53.5 to 59.5 moz of silver (including Silverstream) in the year 2021. Shares of Fresnillo have yielded a price return of 37.29 per cent in the past one year. Fresnillo has a market capitalisation of over £6,714.57 million.
Polymetal International Plc (LON: POLY)
Polymetal International is among the world’s leading producers of Gold known for strong growth along with a robust dividend yield. Amid a challenging global backdrop in 2020, the precious metal miner reported an increase in revenue of 28 per cent to US$ 2,865 million. Driven by higher production volumes and commodity prices along with lesser cash costs, the company reported an increase of 57 per cent year on year in adjusted EBITDA that stood at US$ 1,686 million.
Also, the Gold sales in 2020 were in line with production volume trends, up by 2 per cent year-on-year to 1,392 Koz. During 2020, the precious metal miner managed to reduce its net debt to US$ 1,351 million (31 December 2019: US$ 1,479 million). The board of the company has proposed a final dividend of US$ 0.89 per share in the light of strong balance sheet and underlying business performance in 2020. Notably, the annual dividend yield of the company stood at 6.56 per cent. Polymetal International has a market capitalisation of over £6,869.68 million.
Centamin Plc (LON: CEY)
FTSE 250-listed Gold mining company Centamin’s share surge was driven by improved commodity pricing along with improved operating efficiencies and productivity that helped the company in delivering solid financial performance in 2020.
The company recorded 468,681 ounces of Gold sales at an average realised gold price of US$1,766 per ounce that led to record revenue generation of US$829 million in 2020. During the period, the precious metal miner recorded a 54 per cent increase in EBITDA to US$439 million. The company is debt free and has a strong balance sheet with liquid assets of US$310 million, as of 31 December 2020.
The free cash flow of Centamin has grown at a healthy rate of 91 per cent to US$142 million, which enables the company to propose and pay dividends worth US$104 million in 2020. The board has proposed a final dividend of 3 US cents per share for 2020. Also, the board intends to pay a minimum US$105 million in annual dividends during 2021. Centamin has a market capitalisation of over £1,272.13 million.