This Gold Miner's Margin Per Ounce Just Went From $914 to $2,401

Cerrado Gold's margin per gold ounce sold at its Minera Don Nicolás mine in Argentina jumped to $2,401 in the second quarter, more than 2.6 times the $914 recorded a year earlier. The company reported the results on August 18.

Gold equivalent production rose 35% to 15,415 ounces, Cerrado said. Heap leach output climbed to 9,981 ounces. Irrigation issues that had constrained recoveries in prior quarters eased, the company said. Silver recoveries at the heap leach operation improved from 15% to 76% year-over-year. The high-grade CIL plant contributed 5,434 ounces from stockpile and underground ore.

The margin expansion came from price, not cost. The average realized gold price reached $4,184 per ounce, up from $2,684. Total cash costs per ounce sold were $1,783, roughly flat with $1,770 a year earlier. Cerrado has no hedging in place, so it captured the full gold price rally.

Metal sales revenue more than doubled to $64.6 million from $29.6 million. Cost of sales was $41.6 million, leaving gross margin from mining operations at $22.9 million, more than triple the $6.2 million in the prior year. Net income from operations rose to $9.2 million from $1.2 million.

Cerrado also reported progress on a court injunction favouring its Lagoa Salgada project in Portugal and the completed buyback of streaming obligations that had been layered onto both MDN and Lagoa Salgada. The company said it had also enlarged the design for the Mont Sorcier iron project in Quebec.

Gold prices have rallied this year, pushing up margins for unhedged producers. Gold profile

Cerrado said it completed the buyback of streaming obligations on both MDN and Lagoa Salgada during the quarter, removing a layer of cost from future production.