This article illustrates how good value BDR is provided POG doesnt tank any further.
The price of iron ore may still be suffering, but margins for many ASX-listed gold miners have shot up dramatically in the most recent December (2014) quarter.
Higher average gold prices, supported by the falling Aussie dollar, benefited most ASX-listed gold miners compared to the prior September quarter, but it was big cost reductions that really helped gold miners to jump-start margins.
Margins in this case are measured as the difference between a miner’s All-In Sustaining Cost (AISC) per ounce, and the average price of gold received. Four of the highest margin ASX-listed gold miners are listed in the table below.
Source: Company quarterly updates. Notes: ¹reported in USD, converted to AUD Beadell Resources Limited(ASX: BDR) led the charge with a margin of around 72%, which was a staggering increase from around 4% in the prior quarter. Beadell benefited through a significant reduction in costs brought about by a 75% increase in production and also got a significant benefit from the falling Aussie dollar and Brazilian real currencies against the U.S. dollar. Newcrest Mining Limited‘s (ASX: NCM) margin dropped from over 60% to 45% as a result of higher costs, which snuck up by 11% over the prior September quarter. This was partly due to a negative impact from currency movements.
One of the key problems for Newcrest remains the Lihir gold mine in Papua New Guinea. The mine accounted for 27.8% of total gold production in the quarter, but had AISCs above the average price of gold received, producing a negative margin – something Managing Director and CEO Sandeep Biswas expects to change going forward.
Margins for Kingsgate Consolidated Limited (ASX: KCN) improved dramatically from 12% in the September quarter to around 46%; while Evolution Mining (EVOLUTION FPO ASX: EVN) improved from 32% to 45%. The improvement in operating conditions for both companies has been celebrated by investors this year, with shares in Kingsgate Consolidated and Evolution rising 19% and 48% respectively.
So does that make Beadell a must-buy stock? Although Beadell Resources had the best improvement, the company has forecast higher costs for the year ahead. AISCs during calendar year 2015 are expected to be between US$810 and US$890 per ounce ($1,042 – $1,145). However if gold prices rise and the company continues to benefit from volatile currency movements, it has the potential to recover strongly from the current share price of $0.30.
