viewKarora Resources Inc.

Karora Resources now a 'top tier' junior producer as it posts strong 2Q operating and financial results

The firm produces gold from its Beta Hunt in Western Australia and has continued to lift output by integrating the Higginsville operations there

Karora Resources Inc. -
Karora repeated its production and cost guidance for the full year 2020 of between 90,000 and 95,000 ounces of the precious metals

Karora Resources Inc (TSX:KRR), formerly RNC Minerals, posted a strong second quarter to end-June, 2020, which saw the miner increase its earnings, boost the balance sheet, and reduce costs.

The firm produces gold from its Beta Hunt in Western Australia, and has continued to lift output from integrating the Higginsville operations, which includes a mill, and which it bought a year ago.

READ: Karora Resources closes acquisition of Spargos Reward Gold Project in Western Australia following extensive due diligence

On Monday, Karora repeated its production and cost guidance for the full year of between 90,000 and 95,000 ounces of gold at an average all-in-sustaining costs (AISC)  of US$1,050 to US$1,200 per ounce sold.

For the three months to June 30, 2020, the firm reported consolidated gold production of 24,078 ounces at AISC of US$1,065 per ounce, at US$36 per ounce improvement on 1Q, while net earnings came in at C$9.8 million, significantly up from C$0.5 million in the first quarter this year.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was C$17.3 million, up from C$13.6 million in the preceding quarter.

Karora ended 2Q with cash of C$50.2 million, and working capital of C$43.8 million, up from C$11.8 million and C$13.1 million respectively from March 31 this year.

"We have been extremely busy at Karora since the start of the second quarter, with yet another strong operational performance of sustainable gold production and steadily reducing costs, despite challenges associated with COVID-19," Paul Huet, Karora CEO said in the earnings statement, noting that the firm was now a "top tier junior producer".

"We eliminated the Morgan Stanley NSR gold royalty on the Higginsville properties and announced an agreement with Maverix Metals to reduce the Beta Hunt gold royalty by 2.75%, essentially unlocking HGO and Beta Hunt for renewed exploration growth," added the company boss.

"We also recently announced the closing of the Spargos high-grade gold project acquisition, which we expect to fast track into our production profile 2021."

The company also highlighted its recent sale of the remaining 28% stake Dumont Nickel Project providing immediate cash of nearly C$11 million that can be re-invested in growing the business, while retaining significant upside exposure to the value of Dumont.

"I am pleased to announce that we are now unhedged on 100% of our gold production moving forward and we look forward to full exposure to the excellent gold prices in today's market," added Huet.

Shares eased 2,23% to C$3.94 in Toronto.

---Updates for share price---

Contact the author at giles@proactiveinvestors.com

Quick facts: Karora Resources Inc.

Price: 3.6 CAD

Market: TSX
Market Cap: $523.17 m

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