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Alacer Gold: Sulphide Project Completed On Time And Under Budget

Feb. 11, 2019 4:11 PM ETAlacer Gold Corp. (ALIAF)6 Comments
Philip MacKellar profile picture
Philip MacKellar
756 Followers

Summary

  • 2018 results are in and the 2019 outlook is impressive.
  • The Çöpler sulphide expansion comes in on time and under budget, significantly increasing mine life at attractive all-in costs.
  • Management brings the Çakmaktepe oxide deposit online.
  • Alacer adds exploration and development prospects to its portfolio.
  • This investment is exposed to certain risks, including its concentration in Turkey, debt profile, and underlying commodity price volatility.

Editor's note: Seeking Alpha is proud to welcome Philip MacKellar as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to the SA PRO archive. Click here to find out more »

Editor's note: Seeking Alpha is proud to welcome Philip MacKellar as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to the SA PRO archive. Click here to find out more »

Introduction:

For those of you who are new to the name, Alacer Gold (OTCPK:ALIAF) is a mid-sized miner headquartered in Colorado. It owns an 80% stake in the Çöpler open-pit mine in eastern Turkey, with local Turkish company Lidya Mining owning the remaining 20%. Alacer’s primary listing is ASR on the Toronto Stock Exchange, and it is incorporated in the Yukon. Here at Contra the Heard, the stock has been owned since late 2014 and the average purchase price is roughly C$2.00.

The stock was purchased in 2014 to add gold sector exposure. At the time, and even currently, gold miners were unloved and fit well within our contrarian bailiwick. Alacer was debt free at the time, was operating Çöpler successfully, and had promising development potential. The analysis suggested Alacer could better than double if the development projects paid off. As is outlined below, these projects are now coming online and the stock is responding.

Latest Results and 2019 Outlook:

Last week, Alacer released its full-year 2018 results. The company produced 171,000 ounces of gold versus expectations of 160,000 to 230,000 ounces. It also did so at an All-in Sustaining Cost (AISC) of $609 per ounce. This was below the forecast $650 to $700 range. Meanwhile, revenues were up slightly, but net income declined. The

This article was written by

Philip MacKellar profile picture
756 Followers
Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter. He has been with the company since 2011 and has been investing since 2004. The newsletter’s primary focus is on contrarian and value-oriented investment opportunities traded in the United States and Canada. In addition, Philip sometimes engages in M&A, other special situations, and holds bonds, preferred shares, and convertible securities. Contra the Heard is a Toronto based company and was founded in 1995. Philip also blogs about personal finance topics on his own website called mymoneymoves.ca in his free time. You can also follow Philip at the Globe & Mail, on Twitter @Rallekcam, and catch him on YouTube at Contra the Heard.

Analyst’s Disclosure: I am/we are long ALIAF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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