Alacer Gold Stock Is Set for More Upside

Alacer Gold [stock_market_widget type="inline" template="generic" color="default" assets="ASR.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock is showing no signs of slowing down even after gaining close to 160% this year. Shares of the gold miner got another shot in the arm after it released its fiscal third-quarter report that revealed a terrific jump in its top and bottom lines.

Let’s take a closer look at what drove Alacer’s latest results and why it may be a good idea for investors to keep holding the stock despite its massive gains in 2019.

Alacer Gold’s Financial Growth Is Terrific

Alacer Gold delivered third-quarter revenue of almost $144 million as compared to the prior-year period’s top line of $35.5 million. More importantly, the company swung to a net profit of $45.4 million during the quarter from a loss of $32 million a year ago.

This impressive improvement in Alacer’s top and bottom lines was a result of a nice bump in the company’s production and higher gold prices. More specifically, the company’s total gold production for the quarter came in at 101,274 ounces, which was a massive jump from the prior-year quarter’s output of 26,160 ounces.

This massive increase was driven by the sulfide plant that came online recently at the Çöpler gold mine. This plant didn’t contribute anything towards Alacer’s production in the year-ago period, but it accounted for around 67% of the total production in the third quarter.

The oxide plant, which accounts for Alacer’s remaining production, also delivered a 28% annual increase in production. The higher production achieved by Alacer during the quarter was a result of the company’s strong grade profile. The company enjoyed a gold grade of 1.36 grams per ton at the oxide plant last quarter as compared to 0.54 grams per ton in the year-ago period.

Thanks to the higher grades, Alacer’s costs grew at a much lower pace than the company’s output. Its consolidated all-in sustaining costs increased just 7% year over year in the third quarter to $747 an ounce.

On the other hand, Alacer’s average realized gold price jumped 22% year over year in the third quarter to $1,478 an ounce. So, the gold miner has been pulling all the right strings to deliver impressive growth. The good part is that it can keep doing so in the future as well.

What Next for Alacer?

Alacer’s financial performance could keep accelerating in the future thanks to its upgraded production profile and the positive gold pricing scenario.

Alacer has increased its gold production guidance from the oxide mine for the year to a range of 150,000-160,000 ounces. Its overall production guidance now stands at 380,000 ounces to 430,000 ounces. Earlier, Alacer was expecting annual production of 125,000 ounces to 145,000 ounces.

This means that Alacer’s financial performance could keep accelerating in the future thanks to its upgraded production profile and the positive gold pricing scenario. In fact, analysts expect the company to keep growing in the double digits next year, which is why investors should continue to hold the stock.

Alacer trades at a forward price-to-earnings ratio of just 14, which makes it a good buy thanks to the rapid growth it’s delivering and the attractive valuation.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


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