Australian gold producer Red 5 Limited's (ASX: RED) share price popped 25.0% higher in July. The increase was enough to place the company near the top of the leaders' board on the All Ordinaries (INDEXASX: XAO), which saw a gain of 0.9%.
The 2020 chart for the Red 5 share price looks like a sketch of a high adrenaline rollercoaster ride. Even before the wild market selloff during the height of the COVID-19 market began on 24 February, Red 5's share price had dropped as much as 22% only to gain 28%.
Then, from 24 February through to the beginning of its recovery on 3 April, the company's shares fell a stomach-churning 50%, hitting 18 cents per share. Since then it's been a volatile ride higher, with the Red 5 share price closing July up 39% from its 3 April low to finish the month at 25 cents per share.
Year-to-date, the gold miner's shares are down 13%. At its current share price of 29 cents, Red 5 has a market capitalisation of $568 million.
What does Red 5 do?
Red 5 is an Australian gold producer with operations in the Darlot and King of the Hills gold mines in the Eastern Goldfields region of Western Australia.
Its acquisitions of these mines in October 2017 marked the beginning of a significant new growth phase for the company. Since acquiring the mines, Red 5 has increased production across both sites to more than 100,000 ounces of gold per year. Furthermore, Red 5 is conducting a major exploration program in the world-class Leonora-Leinster mineral district of Western Australia.
The company also holds an interest in the Siana Gold Project in the Philippines. This is held under a Mineral Production Sharing Agreement (MPSA) by Greenstone Resources Corporation (a Red 5 Philippine affiliate company).
Why did the Red 5 share price surge 25% in July?
There were no major announcements from the company in July that would have driven its shares up 25% for the month.
The company did release its 2020 quarter production update on 6 July. The report confirmed its production of 20,707 ounces of gold was in line with its guidance of 21,000 ounces. Additionally, it stated, "Mine production from both the Darlot and King of the Hills mining operations are currently operating to plan and alignment with the operational initiatives instigated during the Quarter."
Much of the company's share price gains look to be due to the sharp increase in the gold price. Gold rose from US$1770 per troy ounce on 1 July to US$1,975 per ounce, a gain of 12%.
Today, gold is trading for US$2,029 per ounce. And Red 5's share price is at 29 cents, up 15% since 31 July.
