Five Small-Cap Gold Stocks That Have Performed Well During the Pandemic

Summary

• The demand for gold and gold-related assets has risen exponentially during the pandemic
• Gold prices have grown by nearly 20 per cent since the mid of March this year
• The fuelling demand for gold is also guided by the slow state of economic recovery being witnessed in the United Kingdom

The demand for gold and gold-related assets has risen exponentially during the pandemic. Investors who have been witnessing heightened volatility in equity markets and crude oil markets have made a beeline for the precious metal to park their wealth and avoid value erosion. Gold prices have grown by nearly 20 per cent since the mid of March this year, and the London metal exchange gold futures for 21 months from 8 July 2020 stand at $1815.80 per ounce which is marginally higher than the spot price of the metal as on date.

Below we take a look at small-cap gold mining companies listed on the London Stock exchange, which have done exceedingly well in the lockdown was imposed across the United Kingdom.

1. Shanta gold Plc – (LON:SHG) Shanta gold Plc is an East African gold exploration, mining, and exploration company. The company has a 1500² Km of Licence acreage in Tanzania, where its flagship Luika gold mine is located.

The company on 20 April this year posted the results of its first quarter of the year. The physical production of gold for the period was marginally higher than the fourth quarter of 2019 but the EBITDA for the period jumped by nearly 74.4 per cent to $15.0 million compared to $8.6 million recorded for the fourth quarter of 2019.

The company has also acquired the Kenyan assets of Barrick Gold Corporation, with the transaction set to close by mid- 2020. This acquisition will add 1,182,000 ounces of gold reserves to the company’s kitty.

The company also reported that it had not been impacted by the coronavirus pandemic and its operations are running smoothly.

On the day when the lockdown was imposed on 23 March 2020, the shares of the company were trading at GBX 9.25 which subsequently rose to GBX 14.00 on 9 July 2020, gaining 51.35 per cent during the period. The market cap of the stock stood at £111.15 million.

2. Cora Gold Ltd – (LON:CORA) Cora Gold Ltd is a West Africa based gold mining company. It has several gold exploration projects in Mali and Senegal which have excellent prospects to be highly productive mines in the future. During the first half of 2020, the company has got good results from its drilling campaigns from its Sanankoro Project in the Yanfolila gold belt.

The rising prospects from its assets have been attracting a vast number of investors to this company, which is the primary reason its shares have been rising since the beginning of the year.

The shares of the company were trading at GBX 4.3 on 23 March 2020 and have since then risen to GBX 8.75 on 9 July 2020 registering a growth of 103.49 per cent. The market cap of the stock stood at £16.67 million.

3. Highland Gold Mining Limited – (LON:HGM) Highland Gold mining Limited has mines located in the region of Mnogovershinnoye and Belaya Gora in Russia. The company had given lower production guidance for the first half of 2020 due to fall in the ore grades; however, the rising prices of gold more than made up for the losses. The company has given a guidance of 290,000 to 300,000 ounces of gold production for the full year 2020, which is almost close to what it produced in 2019. The strengthening of gold prices though will continue to provide strength to the company’s bottom line.

The shares of the company were trading at GBX 172.1 on 23 March 2020 and rose up to GBX 226 on 9 July 2020 gaining 31.32 per cent during the period. The market cap of the stock stood at £822.41 million.

4. Chaarat Gold Holdings Ltd – (LON:CGH) Chaarat gold holdings is a British Virgin island registered gold mining and exploration company. The company has mining licence acreage in Armenia and Kyrgyzstan. While the company's mines in Armenia are currently in the production stage, its Tulkubash and Kyzyltash Gold Projects in Kyrgyzstan are in the exploration stage. The company has this year expedited the exploration work on its Tulkubash and Kyzyltash Gold Projects, where it has a prospective reserve of 300,000 ounces of gold. The strengthening of gold prices in 2020 in response to the coronavirus pandemic became the main reason for the strengthening of its stock prices on the London stock exchange.

The shares of the company were trading at GBX 23.90 on 23 March 2020, on the day the lockdown was imposed in the UK and it rose to GBX 37.00 on 9 July 2020, registering a growth of 54.81 per cent during the period. The market cap of the stock stood at £194.09 million.

5. Greatland Gold Plc – (LON:GGP) Greatland gold Plc is an Australia focused gold mining company having its mining licence acreages located in Tasmania and Western Australia. The company last month had informed that drilling for the company's Havieron deposits in the Paterson region in western Australia had given excellent results. The company expects to commence production in the mine in the next two to three years’ time.

The shares of the company have been on a growth trajectory since the beginning of the year. The shares of the company were trading at GBX 3.50 on 23 March 2020 when the lockdown was imposed in the UK and was trading at GBX 12.70 on 9 July 2020, registering a growth of 262.85 per cent during this period. The market cap of the stock stood at £477.55 million.

Almost all gold mining and production stocks on the London stock exchange have performed notably well in the last three and a half months. The lingering uncertainty regarding how long it will take for an effective vaccine to arrive so that an end may be put on the pandemic weighs down heavily the psyche of the investors. The fuelling demand for gold is also guided by the slow state of economic recovery being witnessed in the United Kingdom and elsewhere in the world, while monetary policy movements of central banks and extension of economic stimulus measures by the government would also have a say on how the prices of gold behave in the next few months to a year. The London stock exchange could also see a rebound in the second half of the year given the strong resurgence in some of the industries which could provide additional impetus to the gold stocks.