Shares of silver and gold miner Great Panther Mining (NYSEMKT:GPL) rose 12% out of the gate on Aug 6. That quickly settled down, however, with the stock sitting at a roughly 6% gain by 10 a.m. EDT. No big surprise about what got investors excited: The company reported earnings.
The second quarter of 2020 was nothing short of exceptional for Great Panther, which posted a 48% revenue increase over the same period in 2019. Adjusted EBITDA rose a dramatic 1,377%. And earnings came in at $0.03 per share compared with a loss of $0.02 per share in the same period of 2019. Looking under those numbers reveals even more good news.
For example, Great Panther's average realized price for gold rose 32% year over year, with the realized price of silver up 24%. Meanwhile, the company's all-in sustaining costs per gold equivalent ounce sold fell 11% compared with the previous year. In addition, the company sold 10% more on a gold equivalent ounce basis. Basically, revenue rose while costs went down, and this all occurred while COVID-19 was causing massive global economic disruptions. No wonder investors were excited as trading got underway.
While the second quarter was a good one, and the quick stock price pop today was notable, investors need to step back and look at the bigger picture here. Great Panther's stock is up more than 90% so far in 2020. That's a very large gain, which isn't surprising given that gold has been in rally mode of late (miners tend to move more dramatically than the precious metals they mine). But precious metals can be very fickle and expecting gains of this nature to keep going is probably not the best course of action. In fact, at this point, investors should probably consider erring on the side of caution when it comes to gold and the companies that mine for it. Going too far out on a limb could lead to big gains or, just as easily, massive losses.