Why Allied Nevada Gold's Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of gold and silver miner Allied Nevada Gold (NYSEMKT: ANV  ) dropped 23% today after reporting earnings.

So what: Second-quarter revenue rose 75% from a year ago to $59.0 million and net income was $4.2 million, or $0.04 per share. But analysts expected a far more robust $81.4 million in revenue and $0.08 per share in earnings, which caused the big drop today.  

Now what: Management also announced the delay of construction of a mill at Hycroft until it can study the plan more. Low gold and silver prices are affecting revenue and the return on investment has fallen along with prices. I don't think gold prices are going to recover because the economy is slowly improving, which will keep me out of this miner, particularly when considering the low profit, even at last quarter's prices.

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  • Report this Comment On August 07, 2013, at 2:38 PM, ANVLong wrote:

    So you forgot to mention the fact that the only reason they are short is because low yield due to human error. The solution on one of the leach pads was improperly applied. All that gold is still there. They are going to be way to the upside on production in Q3 and Q4 when they pull it out. Also the only reason for the delay in the plans for the mine is because they may have found an even better way to mine the claim and want to make the right choices on how to spend their money. This company is sitting on billions in gold and silver and they are looking to pull it out for less than anyone on earth. They are planning properly for making the most money.

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