Avesero shares lay flat despite massive jump in earnings and revenues at gold miner

Gold miner Avesoro’s shares lay flat today despite a massive jump in revenues and earnings as the company admitted it was unlikely to generate free cash in the short term.

The firm saw a significant increase in the value of its mine, nearly doubling the reserves.

“The long term picture is much better than it was previously,” finance chief Geoff Eyre told City A.M.

However this year Avesoro has to deal with a lot of so-called waste stripping, where the company invests to extract non-ore holding parts of the pit, eating into cash generation. However this will reduce investment in the later part of the mine’s life.

“I think it’s maybe polarised [investors] a little. You have the ones that are looking at the short term, whether it’s going to generate cash, and the long term view, more from the institutional investors. The feedback we have from them is they are very positive about what we are doing,” finance chief Geoff Eyre told City AM.

“We don’t have a dividend policy in place anyway, so it’s more about the optics than anything else,” he added.

Revenues increased 189 per cent to $283m (£214m), driven by a 186 per cent increase in gold sales to 221,000 ounces and a one per cent rise in the average price of its gold.

Loss before tax fell nearly 40 per cent to $16.4m, while gross debt fell five per cent to $127m.

Meanwhile, earnings before interest, tax, depreciation and amortisation (Ebitda) grew 348 per cent to over $77m.

It expects to produce between 210,00 and 230,000 ounces of gold in the 2019 financial year, at an operating cash cost of $850 to $910. However, this is a step below the company’s 2018 guidance of 220,000 to 240,000.