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Asanko Gold: Q3 Shows Improvements, But Shares Will Likely Stagnate - Seeking Alpha

Saturday, 10 November 2018
Asanko Gold reports Q3 results.
The mine shows improvements, achieving record production.
There are not enough catalysts for upside right now in the light of stagnating gold prices.

Asanko Gold (AKG) has recently reported its third-quarter results. I looked at the company for a potential upside momentum play back in September, and now it’s time to update my thoughts.

Asanko Gold Mine had a record quarterly gold production of 61,599 ounces at all-in sustaining costs (AISC) of $971 per ounce. Following the rapid increase in mining costs per ton in the previous quarters, costs showed a sign of stability. Also, the strip ratio decreased, positively affecting the mine’s results as Asanko had to go through less waste to get the ore:

As a result, the company states that it is on track to meet the top end of production guidance of 200,000 – 220,000 ounces at AISC of $1050 - $1150 per ounce. This is a welcome stabilization since the mine’s performance was the key reason behind the downside in Asanko shares in prior years.

On the financial front, the company is safe as it fully repaid the debt with the proceeds from the sale of the stake in the mine to Gold Fields (GFI). As a reminder, Gold Fields purchased a 50% joint venture interest in Asanko’s 90% interest in the Asanko gold mine and associated properties for $185 million, of which $165 million have already been paid. Also, Gold Fields paid $17.6 million to purchase 9.9% of Asanko shares at a price of $0.79 per share. This price looks like a magnet for Asanko shares, as they have been stuck near this level for some months now:

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