Last week ended on a low note with the S&P/ASX 200 (ASX: XJO) falling 5% on Friday. Fear of missing out gave way to caution as investors questioned the impact of COVID-19 on profits.
Economic indicators show the global economy shrinking at an alarming pace, with US GDP declining 4.8% in the March quarter. US unemployment claims have passed 30 million since shutdowns began. In Australia, it is estimated close to a million people have lost jobs since the start of the pandemic.
Companies, too, are beginning to feel the pain. Last week Australia and New Zealand Banking Group Ltd (ASX: ANZ) saw profits drop 51% as a result of provisions for losses associated with COVID-19. National Australia Bank Limited (ASX: NAB) slashed its interim dividend by more than 60% as cash earnings took a dive.
The share market rallied hard in April on hopes advanced economies would reopen quickly. The share market’s April performance was the best on record since 1988. But on 1 May things took a turn – the fall in the S&P/ASX 200 on Friday erased more than half April’s 8.8% gains. We take a look at the 5 ASX shares that fell the most last week.
Newcrest Mining Limited (ASX: NCM)
Newcrest Mining shares fell 11.8% last week to close the week at $25.15. While gold prices were down last week, they have recently surged to seven-year highs of above US$1700 an ounce.
Last week Newcrest tapped investors for $1.2 billion in fresh capital last. Australia’s biggest gold miner will use funds to pursue its growth ambitions in Ecuador and Canada.
Capital raised will fund the acquisition of financial instruments linked to Ecuador’s Fruta Del Norte mine, accelerating the return Newcrest receives for its existing investment in the mine. The Fruta Del Norte mine first produced gold in the last six months and is described by Newcrest as a ‘tier one’ asset.
Funds will also be invested in Canada’s Red Chris mine. Newcrest bought a controlling stake in the mine for $806.5 million last year, but it requires substantial spending and exploration success to be profitable.
Gold Road Resources Limited (ASX: GOR)
Shares in Gold Road Resources lost 11.2% last week to finish the week at $1.47. The company lost 8% on Friday alone in the general market sell-off. Gold prices shed some of their recent gains last week which had a flow effect for gold miners.
During the March quarter, the Gruyere Gold Mine (which Gold Road Resources has a 50% interest in) produced 59,595 ounces of gold at an all-in sustaining cost of $1,135 an ounce. Gold Road Resources reaffirmed its annual production and cost guidance in late April.
Attributable gold sales in the March quarter totalled 31,700 ounces at an average price of $2,001 an ounce. Gold Road Resources had cash on hand and bullion of $115 million at the end of the March quarter. A $100 million revolving credit facility was drawn to $80 million giving the miner a net cash position of $35 million.
Northern Star Resources Ltd (ASX: NST)
Northern Star Resources shares tumbled 10.9% last week and ended the week at $11.75. The miner lost 8% in Friday’s market rout alongside its fellow gold producers.
Northern Star released its March quarter results during the week with a total of 239,031 ounces of gold sold during the quarter. The performance generated underlying free cash flow of $89 million for the quarter after investing $66 million in growth capital and exploration.
Some Covid-19 related measures resulted in temporary reductions in production. This resulted in increases in unit costs in the March quarter but paved the way for an expected improved performance in the June quarter.
Northern Star reported cash, bullion, and investments of $551 million at 31 March. Corporate debt stood at $700 million. Payment of the $55 million interim dividend was deferred to 27 October. The full year dividend is expected to be paid as normal and equal 6% of Group revenue.
Saracen Mineral Holdings Limited (ASX: SAR)
Shares in Saracen Mineral Holdings fell 9.8% last week to close the week at $3.97. Saracen was one of the top gainers the previous week with shares gaining 5.4% to close at $4.40.
Shares in the gold miner were sold off last week as the price of gold fell. Gold prices hit a high of $2720 the previous week but withdrew to $2590 on Thursday. During the week Saracen announced record quarterly gold production for the March quarter.
In the March quarter Saracen produced 158,133 ounces of gold at an all-in sustaining cost of $1,133 an ounce. Coronavirus had a minimal impact on March quarter production. Although it is unclear whether there will be an impact in the June quarter, Saracen has maintained its FY20 guidance of 500,000 ounces of gold.
In the nine months to 31 March 2020 Saracen produced 374,684 ounces of gold at an all-in sustaining cost of $1,081 an ounce. The company has large ore stockpiles exceeding 1.7Moz which will help insulate the business should mining be restricted by COVID-19 impacts.
Evolution Mining Limited (ASX: EVN)
Evolution Mining shares fell 8.9% last week and ended the week at $4.72. Evolution Mining was also a top gainer the previous week, when shares climbed 9.3% to close the week at $5.18. Evolution Mining was another victim of the fall in gold prices.
In the March quarter, Evolution produced 165,502 ounces of gold, bringing year-to-date gold production to 528,359 ounces. For FY20 Evolution Mining has provided guidance of gold production of around 725,000 ounces and an all-in sustaining cost of $940 – $990 per ounce of gold.
Evolution Mining also produces silver and copper. Prices of silver declined last week, having previously been on the rise since March. FY20 YTD Evolution Mining has produced 438,435 ounces of silver and 15,786 tonnes of copper.
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Motley Fool contributor Kate O'Brien 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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