What happened
Shares of Canadian gold and silver miner Pretium Resources (PVG) started trading off on Aug. 6 about 10% higher than they had closed the day before. Then they went even higher, hitting a roughly 25% gain by 10 a.m. EDT. The big news for the day was the company's earnings report, which, as the price action suggests, was pretty good.
So what
Pretium's top line increased nearly 50% in the second quarter of 2020 compared to the same period in the prior year. Earnings, meanwhile, tripled to $0.18 per share from $0.06 per share in the second stanza of 2019. Adjusted earnings, which takes out one-time items, were even better, chiming in at $0.26 per share, up from $0.09 in the previous year. It makes sense that investors were, to understate things a little, upbeat about the company's stock following numbers like that.
Image source: Getty Images.
And those weren't the only positives. For example, the company's all-in sustaining costs, which is how much it costs to mine an ounce of gold and maintain mining operations and production levels, fell 3% year over year in the second quarter. Pretium's realized price per ounce of gold sold, meanwhile, rose a hefty 30% or so. The company also reduced its debt load about roughly 23% through the first six months of the year, taking advantage of the strong performance it has achieved.
Management believes it can reach its 2020 production guidance assuming there's no material COVID-19-related business disruptions. So far, that hasn't been an issue. The most notable negatives were on the production front, with gold production roughly flat year over year in the quarter and silver production down nearly 20%. Rising precious metals prices, however, appear to have more than offset investor concerns on the production front today.
Now what
So far in 2020 Pretium's stock is only up around 11%, with most of that gain coming today. It was actually down 10% or so for the year when the market closed on Aug. 5. The company's relatively weak production so far in 2020 is probably part of the equation, noting that most other miners have seen far more material price increases. Still, after the huge price jump today, a lot of good news has been priced into the shares in a very short period of time (about 30 minutes). Investors should probably tread with caution.
