Capricorn Metals reports strong financial results for 1H FY2023; Shares up on ASX

Highlights:

• Capricorn Metals Ltd has reported a pre-tax profit of AU$58.3 million for the half year.
• The company's gold revenue increased by 16%, with gold sales of 56,218 ounces at an average delivery price of AU$2,587 per ounce.
• The strong performance was primarily driven by the Karlawinda Gold Project.

Capricorn Metals Ltd (ASX: CMM) has reported a pre-tax profit of AU$58.3 million for the half year ended 31 December 2022, marking a 13% increase from the previous corresponding period. This is due to a strong operating performance at the Karlawinda Gold Project (KGP) in Western Australia, where the company achieved a 10% increase in gold production to 60,315 ounces, while keeping costs low despite industry-wide inflationary pressures.

• Capricorn's Australian gold industry AISC of AU$1,105 per ounce, which is in the lowest quartile, underpins a robust EBITDA of AU$74.8 million and an EBITDA margin of 51%.
• The company's gold revenue also increased by 16%, with gold sales of 56,218 ounces at an average delivery price of AU$2,587 per ounce. In addition, the company had 5,196 ounces of bullion on hand which was subsequently sold in January 2023 for AU$13.9 million.
• This strong cash flow from operations of AU$ 65.3 million has helped to deliver a robust balance sheet position, with cash and bullion of AU$91.7 million and a net cash position of AU$41.7 million.

However, the first-time recognition of a tax expense at the half year of AU$18.2 million has been offset by carry forward tax losses still available at 31 December 2022. Capricorn's H1 FY23 gold production of 60,315 ounces at an AISC of AU$1,105 per ounce puts the company on track to achieve production guidance for FY23 of 115,000 – 125,000 ounces at an AISC of AU$1,160 - AU$ 1,260 per ounce.

The Karlawinda Gold Project Highlights:

The Karlawinda Gold Project (KGP) is situated in the Pilbara region of Western Australia, about 65 kilometers south-east of Newman. The KGP had a successful first half of operations, producing 60,315 ounces of gold at an all-in sustaining cost (AISC) of AU$1,105 per ounce, establishing it as one of Australia's lowest-cost gold mines. However, following a tragic fatality in October 2022, mining activities were suspended for 20 days at the Bibra open pit. Therefore, mining volumes were significantly lower than expected for the first six months of the year. Mining activities are expected to increase in the second half of the year as three mining fleets (6 digger shifts) are fully utilized, and a seventh digger shift is implemented. A total of 2.18 million tonnes of ore was processed for the period at a head grade of 0.92g/t.

Operational Highlights:

In the previous six months:

• Gold sales increased by AU$19.728 million in 1H FY2023 to AU$145.431 million.
• Ore mined during the period was 3.025 million tonnes. It was AU$3.198 million in the previous corresponding period.
• Ore milled was 2.175 million tonnes. It was 2.128 million tonnes in previous corresponding period.
• Gold production increased from 54,645 oz to 60,315 oz.
• Gold recovery in 1H FY2022 was 91.9%. It increased to 93.5% in 1H FY2023.

In the coming period, the Company expects annual production guidance of 115,000 – 125,000 ounces. AISC guidance is estimated to range in between AU$1,160 - AU$1,260 per ounce.

Stock Information:

By the end of day’s trade, CMM shares settled at AU$3.790, up 1.066% from the previous close. 

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