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Why this gold producer’s shares are on watch today

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Alacer Gold Corp. (ASX: AQG) this morning announced its annual results for the year ending 31 December 2019. Over the past 12 months, the Alacer Gold share price on the ASX has increased by an impressive 105.6%

What does Alacer Gold do?

Alacer is a low-cost gold producer, with an 80% interest in the Çöpler Gold Mine in Turkey. The gold producer is a Canadian company with its primary listing on the Toronto Stock Exchange, although the company also has a secondary listing on the ASX.

Alacer continues to pursue opportunities to further expand its current operating base to become a sustainable multi‐mine producer with a focus on Turkey. Its Çöpler Gold Mine is currently processing ore through two producing plants. The company also operates an oxide plant as well as a new sulphide plant which is now in full swing.

Earnings and operational highlights

The company continued to focus on improving and extending oxide gold production in future years beyond the current Çöpler oxide reserves. This was done by accelerating the development of a number of near-mine ore targets within the Çöpler pits and surrounding areas.

Full-year gold production was 391,213 ounces which was within the updated guidance. Çakmaktepe phase one mining was completed with approximately 1.6 million tonnes of oxide ore hauled to the Çöpler oxide plant for processing.

Alacer revealed that full-year attributable earnings to 31 December 2019 were $116.3 million with normalised attributable earnings of $109.9 million. The company ended 2019 with consolidated cash of $233 million and debt of $280 million, which places the miner in a net debt position of $47 million.

Full-year gold sales were 395,046 ounces which resulted in total gold proceeds of $552.5 million and cash flow from operating activities of $255.2 million. However, this excludes the ounces sold that were produced prior to the declaration of commercial production of the sulphide plant.

2020 guidance

Alacer commented that consolidated production is anticipated to be lower in the first half of the calendar year 2020 due to the continued ramp-up of the sulphide plant and timing of scheduled shutdowns for the autoclaves.

In addition, the company noted that the ongoing in-pit exploration programs at Çöpler and Çakmaktepe continue to develop a number of near-term oxide ore targets.

Sustaining capital expenditure is planned to total $33 million ($26.4 million attributable), which includes $17 million for the ongoing construction of the TSF lifts.

The successful commissioning of the sulphide plant and the exploration process have provided Alacer with a number of growth and development opportunities that are being progressed and will continue in 2020.

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Returns as of 6th October 2020

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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