In an eventful week that saw the world’s biggest economy almost strangle itself to death with deadlock and indecision, one of the world’s multitude of gold companies came out with numbers that surmounted the bickering of petty party politics. Ironically, these tidings came out just as gold prices began another surge, as investors again looked to the shiny yellow metal as a safe-haven amid all the volatility.
Nevada-based Allied Nevada (NYSE, TSX: ANV) announced this week remarkable production figures during an exciting third quarter. A news release announced the company’s Hycroft mine in Nevada drew 52,198 ounces of gold and 184,070 ounces of silver from out of the ground in the third quarter of 2013, and moreover, it sold a record 52,713 ounces of gold and 184,082 ounces of silver.
Such a record quarter made the higher-ups at ANV positively giddy, projecting anywhere from of 175,000 – 200,000 ounces of gold and 0.9 million – 1.1 million ounces of silver production once the clock strikes midnight on New Year’s Eve.
Besides Hycroft, Allied Nevada boasts more than 100 advanced and early stage exploration properties located throughout the “Silver State” of Nevada. Its focus, according to the company website, “on internal growth strategies, including the development of the Hycroft mine from a run-of-mine heap leach operation to a world-class, large-scale heap leach a milling operation.”
ANV is singing the praises of its other facilities in Nevada, having completed several drill programs at the Hasbrouck Project, located near the town of Tonopah.
“Drilling in 2012, “it says “provided encouraging results at the nearby Three Hills, located five miles (8 kms) north of the main Hasbrouck deposit, and have indicated a number of targets which will be the focus of drilling in 2013.
Still, analysts urge caution. According to one, writing for the Motley Fool, "while this was a good quarter, operations have been all over the map over the past year and expectations were very low, so I wouldn't put too much into one three-month period.
"The sharp fall in gold prices," so says the scribe, "and operational problems have led to a 91% decline in the stock before today's open and there are now too many unknowns on both fronts for me to buy."
Certainly, analysts at CIBC aren’t joining the cheering section right away, assigning an underperform rating this week, pending what the miner is able to do in the fourth quarter.
More should be known early in November, when the company reports its financials for the third quarter. In Q2, the net income figure was $4.2 million U.S., or four cents per share, or 31% less than the prior-year quarter, mostly due to higher production costs and reduced metal prices.
If caution is the byword, and more facts are the answer to that caution, investors may find themselves with a bargain on their hands. Allied Nevada stock currently resides in the basement of a 52-week range of $3.54 to $41.02 U.S. The price closed trading Thursday at $4.24 U.S., or 17 cents lower than the day before. As the atmosphere calms down on Capitol Hill, and the attitude toward gold changes, it should be interesting to see if Allied Nevada’s price finds its way back up north again.
