Key Highlights

  • In Q2-2019, Gran Colombia Gold (“GCM” “company”) beat our expectations again, and reported a 13% YoY increase in revenues to $78 million. EBITDA was up 27% YoY to $33 million.
  • Total cash costs dropped 6% YoY to $655 per oz.
  • The strong performance was the result of a 9% YoY increase in gold production to 9 Koz. Production increased at both the Segovia and Marmato mines.
  • We are raising our 2019 production forecast from 220 Koz to 235 Koz, as well as raising our average gold price forecast from $1,300 to $1,400 per oz in H2-2019. As a result, our net profit forecast in 2019 has been revised from $33 million (EPS: $0.67) to $39 million (EPS: $0.80).
  • GCM’s share price is up 59% since our previous update in May 2019. Despite the strong run-up in share price, the company’s shares are trading at $1,248 per oz annual gold production (gold producers’ average – $4,524), $35 per oz resources (average – $170), 0.9x revenues (average – 3.1x), and 1x EBITDA (average – 8.5).
  • The balance sheet is stronger, with $51 million in cash at the end of Q2, and a healthy debt to capital of 26% versus the gold industry average of 43% (Source: S&P Capital IQ).

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