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Premier Gold: A Look At The Q4 Results

Taylor Dart profile picture
Taylor Dart


  • Premier Gold reported its FY-2019 results on Thursday, with the company massively missing guidance after a disappointing year at the Mercedes Mine.
  • While the company's El Nino underground mine has begun commercial production ahead of schedule, it was nowhere near enough to offset the lower production at Mercedes.
  • Not surprisingly, the company posted a net loss this year once again of $20.4 million, after factoring in exploration and development expenditures.
  • While Premier Gold may be a gold/silver producer with two operating mines, the company continues to operate at a loss, meaning that it is inferior to the majority of gold producers in the sector.
  • Based on this, I see the stock as an Avoid, and favor gold miners with positive annual earnings per share and higher margins.

We've seen a much better earnings season in Q4 for the gold miners (GDX) with more than 50% of companies beating earnings estimates, as well as more than 50% beating operating guidance with just a few names left to report. This is a significant improvement from only 32% of companies beating earnings estimates in Q3 2019, and less than 40% beating operating guidance. Unfortunately for investors parked in Premier Gold (OTCPK:PIRGF), the company's performance has diverged from the majority, with a massive miss on both production and cost guidance for FY-2019. Mined grades at the company's Mercedes mine in Mexico continue to trend lower, contributing to much higher costs year over year. Based on less-than-satisfactory operational performance and some of the weakest margins in the sector, I see Premier Gold as an Avoid currently. While bounces are possible after a rough start to 2020, I would view rallies to the C$2.00 level as selling opportunities.

(Source: Author's Table)

Premier Gold is the most recent name to report its FY-2019 earnings results, and to say it was a disappointing year would be an understatement. The company initially guided for 87,500 ounces of gold production for FY-2019 between South Arturo and Mercedes, with 90% of this production coming from the Mercedes mine. Unfortunately, the actual results came in more than 20% lower than expectations, with just 67,427 ounces of gold production and 198,289 ounces of silver production. Worse, all-in sustaining costs for the year came in at $1,218/oz on a consolidated basis, with all-in sustaining costs at Mercedes of $1,260/oz, more than $300/oz above the guidance mid-point of $925/oz. It's no surprise that the company ended up with yet another net loss this year ($20.4 million) based on a significant contraction in all-in margins, and this was despite a nearly 20% rise in the price of gold (

This article was written by

Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, my top-12 miner rankings, GDX buy/sell signals, new positions I am entering/exiting, plus proprietary sentiment indicators updated weekly for gold miners in my newsletter below. Returns Link: https://imgur.com/a/sreY6SzSubscription LinksMonthly: https://buy.stripe.com/7sI14d4b92vFdUc15cAnnual: https://buy.stripe.com/4gw28h0YXeen7vObJP - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I am/we are long GLD, FNV. 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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Comments (12)

fazsha profile picture
I may not always agree with Taylor Dart, but I have to admit, he's quickly becoming THE go-to gold mining writer on SA, with lots of analysis, and we're lucky to have him.
Taylor Dart profile picture
Hi Fazsha,

Thank you, that’s very kind of you. No need to always agree, market would be boring if that was case.

Best to you,

Another missed opportunity because you cannot drive looking forward. Premier is now a sum of the parts story. Hardrock will be divested, Mercedes will either turn around or be sold off and the sum of these two assets are worth way more than the whole company is being valued at presently. Rick Rule talks of this...he looks forward not backwards and does the arithmetic required. You cannot make investment decisions based upon present circumstances. To be successful you must be forward looking...a skill you haven't yet mastered.
Taylor Dart profile picture
Hi GQ,

Yes, I recall you loved the stock about 9 months ago. (-) 30% return in a period when gold up 20%. Sounds about par for the course for most of your picks. Keep up the good work.
Taylor Dart profile picture
Hi GQ,

Think we're down another 15% in 3 days. Did you say missed opportunity?
Tyler no mention of cornerstone asset hardrock worth the share price alone right now...
Taylor Dart profile picture
Hi Randy,

I think that's a matter of opinion. Until they can extract value from asset and sell it or start generating cash-flow from it, it's not technically worth anything to shareholders as it's not delivering value.
thanks haha i was bugging you for premier appreciate it!
Timely and interesting article, thank you.

I say timely as I looked at Premier Gold a few days ago after Rick Rule (of Sprott, who are invested) 'tipped' it in one of his video interviews (sorry, no link). I didn't see anything to warrant adding it to my watchlist, so reassuring that another analyst shares that assessment.
Taylor Dart profile picture
Hi Diottica,

Thank you. I don't hate the stock at these prices, but I love about 10 names in the sector, and don't see why one would buy a turnaround story that could take time when so many other names working. I think that's the problem here unfortunately, it's not a matter of Premier Gold being a terrible miner (though it was a bad year) it's a matter of there being so many good miners and investors are sick of parking money in stagnant stocks that can't benefit from the gold price.
permanent profile picture
Hi Taylor,

thank you for another great article.
I got burned once by going against your advice when buying MUX. Still holding just a few shares of it as a constant reminder.
My greatest play last year was LMCNF wich I sold for about 2,5 fold of my purchase price.
On MUX I lost about 30% and that is my I keep a some shares as a reminder.

Thank you again Taylor.

Have a great weekend.
Taylor Dart profile picture
Hi Permanent,

Flattered to hear the article was of value. Great job on Leagold to make up for MUX.

Have a nice weekend as well!
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