The gold worth has been on a tear this yr, however that’s not translating into earnings for all producers. Concord Gold posted an annual loss regardless of producing higher money flows, with its backside line undermined by gold hedging and international forex losses.
Concord Gold mentioned on Tuesday 15 September 2020 that its full-year internet loss had narrowed to R850-million from a lack of R2,6-billion final yr. The gold worth has been surging this yr, with the Covid-19 pandemic boosting its standing as a haven. Concord mentioned within the 12 months to June, there was a 25% enhance within the rand gold worth to R735.569/kg, leading to a 9% rise in income to R29.25-billion.
Nonetheless, the corporate failed to show that bonanza right into a revenue as gold hedging derivatives and international forex translation losses linked to a US greenback mortgage drained revenue from its coffers. So, not like its friends, Concord will not be paying a dividend.
However the market clearly favored different features of its outcomes and sees earnings within the pipeline at present costs. Its share worth rose by greater than 5% on the day, bringing its beneficial properties within the yr thus far to greater than 100%, in line with Sharenet information.
Gold is all the craze nowadays. Concord’s free money movement greater than doubled within the yr, and that ought to begin flowing to the underside line. And because it started 5 years in the past, the corporate says the hedging programme – which applies to solely 20% of its manufacturing – has realised a internet acquire of R2.2-billion. With such devices, typically you win and typically you don’t.
“Concord continues to take pleasure in beneficial commodity and international trade pricing on the unhedged portion of its publicity, whereas concurrently locking within the present larger costs as a part of its by-product programme,” the corporate mentioned.
Concord has additionally concluded its buy of Mponeng, the world’s deepest mine from floor stage, with shafts reaching 4km beneath the floor, from AngloGold Ashanti and is ready to imagine full possession of the asset on 1 October. That can increase manufacturing with ounces that needs to be worthwhile.
And if gold costs stay strong, the corporate’s shareholders will count on a dividend sooner somewhat than later. DM/BM