Gold Stocks Production Impacted BY COVID-19 But High Gold Prices Could Offset Losses

Although the coronavirus lockdowns might have impacted operations of gold stocks in terms of mining the companies are offsetting the lack of operation through high gold prices. On Thursday gold prices climbed 1%to above one-week highs supported by the optimism of additional stimulus from the US central bank.

The price of spot gold jumped 1.1% to $1,731.49 per ounce having hit $1,738.59 earlier in the trading session its highest in almost 10 days. Similarly, US gold futures gained 1.1% to $1,758.20. The price of gold continues to be supported by growing stimulus packages from central banks globally.

Gold stocks enjoying good revenue because of high prices

One gold stock that has been fitted from the gold prices is Couer Mining (NYSE:CDE) which released positive Q1 results with YoY revenues growing 11%. Its adjusted EBITDA topped analysts’ estimates and it was $46.4 million.

Out of the company’s total sales, 74% were from gold sales with its US operations accounting for 56% of its revenue. Gold production at the Palmarejo mine located in Mexico increased 10% quarter over quarter and it generated operating cash flow of $28.9 million despite being temporarily closed to combat the spread of COVID-19. 

Companies withdraw 2020 production guidance

However, the uncertainty and closure of operations have forced some gold stocks to withdraw their 2020 guidance. Sibanye Stillwater Limited (NYSE:SBSW) has withdrawn its operating and cost guidance because of COVID0-19 caused uncertainties.

The company had predicted its gold output in 2020 to be between 932,000 and 997,000 ounces and platinum to be between 1.7 million and 1.85 million ounces but uncertainties have complicated things. 

Another company impacted by the coronavirus situation is Gold Fields (NYSE:GFI) which now indicates that it will lose 32,000 ounces of gold production at the South Deep mine located in South Africa because of the COVID-19  lockdowns. In the March quarter, the mine produced 61,000 at a cost of $1,227 per ounces ahead of expectations thus creating significant cash flow. 

About Travis Garlick 1803 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.