Teranga Gold Corporation (ASX:TGZ) released promising financial and operating results this morning for the second quarter ending 30 June 2015. Amid difficult conditions in the gold sector, Teranga managed to record profitable numbers.
Teranga Gold is a Canadian-based gold company listed on both the Toronto and Australian stock exchanges. Operating in West Africa, the company is engaged in the production and sale of gold, as well as related activities such as exploration and development. Its primary asset is the Sadiola Gold Mine in Senegal, which was commissioned in 2009.
President and CEO, Richard Young, commented, “With the steps we have taken to reduce our costs and eliminate our debt, awe are in a position of financial straight, generating solid cash flows from operations during the quarter to fund new project capital”
In $US, for the second quarter, the company recorded a net profit of $6.7 million or $0.02 per share. This is coming of a loss of $12.5 million in the previous corresponding period. Cash flow increased to $12.3 million from a loss of $9.8 million in the pcp. Free cash flow increased by $3654 per ounce and includes $147 per ounce in new project capital. Production increased by 24 percent and cash costs decreased by 26 per cent. The company now has a debt free balance sheet with $38.4 million in cash.
Vice President and COO, Navin Dyal commented, “Maintaining a strong balance sheet and financial flexibility is key to prospering in the current weak gold price environment.” “To further augment our financial flexibility and liquidity we recently secured a $30 million revolving line of credit with Societe Generale. This two-year revolver will be used for working capital purposes to smooth out fluctuations in cash flow as we self-fund several new capital projects over the next 18 months.”
Up until mid-June Teranga experienced healthy growth in its share price as a result of promising first quarter results. Declining gold prices have since dragged its share price down to a low of $0.52 last week. In anticipation of promising second quarter results, investors pushed its share price back up and is currently trading at $0.59. The market is yet to react post this morning’s announcement.
Author: Ben Visser
Jul 31, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.