Does Atlantic Gold’s Production Meet Expectations?


Atlantic’s 2018 Production Highlights:

  • Vancouver-based Atlantic Gold (TSX-V: [stock_market_widget type=”inline” template=”generic” color=”default” assets=”AGB.V” markup=”{symbol} {currency_symbol}{price} ({change_pct})” api=”yf”]) exceeded the high end of its 2018 gold production guidance thanks to the ramp-up of initial phase 1 operation at the Moose River Consolidated Gold Mine in Nova Scotia.
  • Atlantic Gold produced 90,531 ounces of gold in 2018 as compared to the production target of 82,000-90,000 ounces that it had set at the beginning of the year.
  • The company’s gold head grade averaged 1.41 grams per ton for 2018, but it fell to 1.37 grams per ton in the fourth quarter of 2018.
  • Atlantic Gold expected to incur cash costs in the range of $400-$448 per ounce and all-in sustaining costs in the range of $540-$588 per ounce for 2018. The company will update on the actual costs incurred during the year when it releases its year-end and quarterly results on March 5.

2019 Production and Costs Guidance:

  • Atlantic Gold expects to produce between 92,000 and 98,000 ounces of gold in 2019. Its production rate in the first quarter will be low while cash costs and all-in sustaining costs will be higher on account of a mill liner change that’s scheduled for late January, as well as the rebuilding of the mining fleet.
  • Atlantic Gold expects its 2019 cash costs to range between $420 and $458 an ounce, while all-in sustaining costs are expected between $521 and $566 per ounce. This means that the company expects its all-in sustaining costs to decline over 2018 levels.
  • Atlantic Gold’s 2019 capital expenditure will fall between $12 million and $16 million, and this includes both sustaining and non-sustaining capital expenses.
Check out our guide to see how Atlantic’s gold production costs stack up again competitors.

Atlantic’s Investments Could Boost Profitability:

  • Atlantic Gold recently made a strategic investment of C$9 million in Velocity Minerals (TSX-V: [stock_market_widget type=”inline” template=”generic” color=”default” assets=”VLC.V” markup=”{symbol} {currency_symbol}{price} ({change_pct})” api=”yf”]) through a non-brokered private placement financing. The investment gives Atlantic control over 39.2% of Velocity on a partially diluted basis.
  • Atlantic plans to use its Velocity stake to advance the latter’s Rozino project by way of feasibility studies, construction, and commissioning.
  • The Rozino project’s preliminary economic assessment indicates that it carries higher grades as compared to the Moose River Consolidated Mine. The mine’s all-in sustaining costs are expected to range between US$550-650 an ounce, which puts it in the lower decile of industry costs.
  • The preliminary assessment also suggests that the mine will require low capital expenditure and will benefit from low strip ratio deposits thanks to its life of mine gold grade of 1.51 grams per ton.

The Future is Bright for Atlantic Gold’s Stock Price:

  • Atlantic Gold enjoyed its first full year of gold production at the Moose River mine in 2018. The first gold was poured at the mine on Oct. 2017 and commercial production began on March 1, 2018.
  • Moose River reportedly has gold resources of 557,000 ounces at a grade of 1.5 grams per ton, indicating that Atlantic should be able to sustain its low-cost production going forward.
  • Atlantic’s interest in Velocity has the potential to add more low-cost production to its coffers and positively impact its margin profile and bottom line in the long run.
  • With gold prices on the rise in recent months, Atlantic Gold could witness an improvement in its financial fortunes going forward. That could help the stock deliver more upside on top of the 20% gains that it has delivered in the past year.

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.


Please enter your comment!
Please enter your name here