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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