Shares of precious metals miner Golden Star Resources (GSS) rose a touch over 14% in early trading on July 29. The big news was the company's after-the-close earnings release on July 28. There was a lot to dig into, but investors seemed to appreciate the long-term potential.
Golden Star's production fell 25% year over year in the second quarter, which is not the type of thing that investors usually want to see. Costs were, essentially, flat. And while the miner is benefiting from elevated gold prices, the production decline still led to a year-over-year revenue decline of 15% on the gold front. Adjusted earnings per share, meanwhile, were lower by roughly 50%. These are not particularly good results. And the stock rose anyway.
This is likely because Golden Star noted that it has enough cash on hand to redeem a convertible note maturing in August without having to issue any shares. That update materially improves the company's balance sheet prospects. Also, Golden Star noted that it's making hay while the sun is shining by processing lower-quality mine material with unused mill capacity. While that increases operating costs, it also increases cash flow and is a net positive for the company. And development efforts continue to progress, with some planned expansions brought forward into the second half of this year from the original expectation of 2022.
So while the second quarter wasn't a great one, there are some silver linings on the clouds at Golden Star Resources. And investors appear to be in the mood to see the glass as half full today.