Can Alacer Gold Stock Rise Further After Doubling This Year?

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 has doubled this year as the miner has managed to take advantage of the increase in gold prices thanks to its rapidly improving production. The stock’s momentum will be put to test when it releases its fiscal second-quarter results next week on July 30.

Let’s take a look at what’s expected of Alacer Gold and if it can manage to sustain its rally post earnings.

The Headline Numbers

Wall Street expects Alacer’s top line to jump a whopping 118% year over year to C$70.65 million. This massive jump in Alacer’s revenue will boost its earnings to C$0.03 per share as compared to a loss of C$0.07 per share in the prior-year period.

Alacer should be able to hit the top-line target as the company has been busy ramping up production. It forecasts 2019 production in the range of 320,000 ounces to 380,000 ounces, which is more than double as compared to last year’s output of almost 171,000 ounces.

Alacer’s production growth this year is being driven by higher grades at the Çöpler gold mine, where the company recently brought online a sulfide plant. More specifically, the sulfide plant carries a grade of 4.75 grams per ton as compared to the oxide plant’s grades of 1.60 g/t.

The higher grades mean that Alacer will be able to mine more gold ore with less waste tonnage, which will allow it to keep costs under check and deliver stronger profitability. More importantly, the company recently announced commercial production at the Çöpler sulfide plant and also increased the production guidance from the oxide plant.

Alacer now expects the oxide plant to deliver production in the range of 125,000 ounces to 145,000 ounces as compared to the earlier guidance range of 90,000 ounces to 110,000 ounces. This, however, is not the only positive for Alacer. According to the company’s press release:

The increase to the oxide production guidance is a result of stacking ore from the ongoing in-pit exploration success, higher than predicted recoveries from blended ore, and positive reconciliation for the oxide ore. Oxide AISC guidance is forecast to decline by $50/oz to $650 – $700/oz.

So don’t be surprised to see Alacer delivering a better-than-expected top- and bottom-line performance this time.

The Stock is Still a Good Buy

Alacer remains a buy even after clocking terrific gains this year as it can scale new highs thanks to its positive operational moves.

It is clear that Alacer is taking the right steps to boost its production and keep costs under check. More importantly, the company is also busy streamlining its portfolio so that it can focus on those assets that could generate the highest returns.

As a result, Alacer has sold its non-operating ownership interest in the Gediktepe Project in exchange for 10% Net Smelter Return (NSR) on all oxide ore production at the mine and 2% NSR on all sulfide production. The company will also get cash consideration to the tune of $10 million as the mine meets certain milestones.

As such, Alacer Gold stock remains a buy even after clocking terrific gains this year as it can scale new highs thanks to its positive operational moves.

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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
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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