Shares in gold producer from Russia, Highland Gold Mining (HGM) responded 5% higher to near 230p on the back of a quarterly operating update. It included “scheduled maintenance at the Belaya Gora processing plant, initially planned for April-May of this year, was brought forward to March” but still the company’s “four operating mines produced a total of 63,482 oz of gold and gold equivalent in Q1 2020, in-line with production forecasts for the quarter”...
Looking ahead, the company notes steps “including complex health screening for everyone on our production sites” and “the mines are each currently stockpiling from two to three months of ore”, though “due to the remote location of Highland Gold's operating and development assets and geographically-restricted access to those locations, the company has not experienced any disruptions to its mining and processing plant operations and construction projects. Likewise, the company is not currently experiencing material disruptions to its supply chain or sales”.
There is also further potential with, for example, “at Kekura, the pilot processing plant conducted its first gold pour in March, while preparations for summer construction continued with equipment, materials and supplies shipped to site over winter roads and construction crews already on location” and the average realised gold price for the quarter $1,593/oz.
Gold is currently above $1,700 with a potentially very exciting outlook and Highland “affirms its guidance for total production of 290,000-300,000 oz of gold and gold equivalent in 2020”. Last year it produced 300,704 ounces with an all-in sustaining cost per ounce of $791 – and we noted on recommendation just last week even a $700 margin on 300,000 ounces is $210 million (currently approx. £167 million) and with also dividend potential - 10p per share paid out for 2019 so far - we consider a more than £1.2 billion valuation, 330p per share, clearly attainable.
The results saw a further 3.5p per share dividend declared - to be paid on 5th June, with an ex-dividend date of 23rd April - and together with the company operational and gold outlook we remain positive here. Still a gold buy.
This article first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve and for new shorting pieces from Tom & Lucian out just yesterday afternoon click HERE
Filed under: Highland Gold Mining, Bidstack, Matt Earl, St James's Place, gold, Conroy Gold
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