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Galiano Gold: A Strong Finish To FY2020

Mar. 01, 2021 3:34 PM ETGaliano Gold Inc. (GAU), GAU:CA3 Comments
Taylor Dart profile picture
Taylor Dart


  • Galiano Gold is down more than 47% from its 2020 highs, which can mostly be tied to the weakness in the price of gold.
  • Just recently, the company released its FY2020 preliminary results, and the company had a solid Q4, helping Galiano beat its FY2020 guidance.
  • Looking ahead to FY2021, the company is expected a higher-cost year, which could be a minor headwind to margins.
  • At current levels, the valuation is starting to look compelling, and I believe the stock is a Speculative Buy at $1.00.

We're more than two-thirds of the way through the Q4 Earnings Season for the Gold Juniors Index (GDXJ), and Galiano Gold (NYSE:GAU) is getting set to report its Q4 and FY2020 results. The company recently released its preliminary results for the year and posted a beat on guidance for the second year in a row, despite minor COVID-19-related headwinds at its 45%-owned Asanko Gold Mine [AGM]. This is a rarity in the sector given that more than 70% of companies missed guidance, and it should translate to strong growth in annual earnings per share [EPS]. With Galiano more than 45% off its highs, the valuation is getting compelling, but I would not rule out a re-test of the recent lows. Therefore, while I am not long currently, I would view the stock as a Speculative Buy at $1.00 if this correction continues.

Galiano Gold owns a 45% interest in the Asanko Gold Mine Joint Venture (JV), but all production figures are reported on a 100% basis unless otherwise noted.

(Source: Company Presentation)

Galiano Gold released its Q4 and FY2020 preliminary results last month and reported annual gold production of 249,900 ounces, a massive beat vs. its guidance mid-point of 235,000 ounces. This strong performance was helped by an impressive finish to the year in Q4, with production coming in at 65,600~ ounces, more than 4% above the trailing-twelve-month quarterly production rate (62,600~ ounces). However, cost guidance came in a little high at $1,115/oz. This miss on costs was not entirely the company's fault because it was partially affected by the higher royalties related to the gold (GLD) price. Let's take a closer look at the results below:

(Source: Company Filings, Author's Chart)

As shown in the chart above, production bounced back strongly in Q4 after a very weak Q3. This weak Q3

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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/db1znYSSubscription 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. 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.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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Comments (3)

Not sure I agree with strong finish, I've been averaging down from 1.80s and not happy it's down this low. I saw it as high 2.11 but I held on and now I have to hold till at least I can break even.
Taylor Dart profile picture
Hi Ribana,

They produced well above their quarterly average to beat guidance, hence the strong finish. High-cost producers get killed during periods of gold price weakness, been no reason to buy the stock and pay more than 6x earnings during a correction in gold price.
Long gau. My avg is $1.10. it had recently climbed to $1.44. This is yet another senselessly beaten down African miner. The others being GFI, HMY, AU, B2GOLD. my whole monthly paycheck going into the above names this week .( And bought Equinox gold today)
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