The share price of small-cap ASX gold miner Red 5 Limited (ASX: RED) will be on watch this morning following the release of its half-year financial results and guidance update.
Strong revenue and earnings growth
The gold miner recorded total gold production of 51,995 ounces for the first half of FY 2020 from both Darlot and King of the Hills. This total was recovered from 477,079 tonnes of ore processed at an average head grade of 3.64g/t Au. Total gold sales for the half-year reached 52,664 ounces.
Sales revenue for Red 5 amounted to $105.31 million for the half-year, which was up strongly from $70.84 million in the prior corresponding period (pcp). Meanwhile, gross profit from operations totalled $24.14 million, up impressively from $11.04 million in the pcp.
Red 5 has continued to invest strongly in exploration and development activities, with a total of $26.24 million attributed to these areas. The primary focus of these investments for the ASX gold miner has been the evaluation of its stand-alone bulk mining operation at KOTH. The Final Feasibility Study is set to be released sometime during the September quarter later this year.
The company reported net profit after income tax of $8.24 million, again up strongly on the pcp where net profit was only $3.72 million.
Net cash flow from operating activities was relatively strong for Red 5, coming in at $32.69 million. The gold miner reached the end of last year with $26.56 million in cash and bullion, with $20.65 million of this in cash and $5.91 million in bullion.
Guidance for March quarter
Red 5 has downgraded its production guidance for the March 2020 quarter. The gold miner now expects production to be in the range of 20,000 to 22,000 ounces, down from the previous guidance of between 25,000 to 29,000 ounces.
Full-year production has also been revised downwards for FY20 from the previous guidance of 110,000 to 120,000 ounces to a new range of 100,000 to 105,000 ounces.
Red 5 explained in its release that production for the March 2020 quarter has been impacted by performance issues relating to its short-term crusher and ball mill. However, on a positive note, the gold miner pointed out that those issues have now been resolved. The miner added that recent daily mill throughput records had been achieved in March 2020, which confirms this conclusion.
Red 5 now expects quarterly all-in sustaining costs (AISC) for March to be in the range of A$1,800 to A$1,950 per ounce. Full-year AISC is expected to be in the range A$1,550 to A$1,600 per ounce.
