LONDON (Alliance News) - Trans-Siberian Gold PLC Monday said its pretax profit rose in the first half of 2015 after the company severely cut its cost of sales and ramped-up production to battle the downturn in gold prices.
The Russian gold miner reported a USD3.1 million pretax profit in the first six months of 2015, swinging from a USD2.2 million loss a year earlier as revenue experienced a small lift to USD21.5 million from USD20.1 million.
The profit was mainly caused by the company significantly improving its gross margin, with its cost of sales falling to only USD13.0 million from USD19.8 million to yield a gross profit of USD7.2 million compared with a USD321,000 profit a year ago.
Trans-Siberian Gold also benefited from lower administrative costs, finance expenses and higher finance income in the period.
Production in the period totalled 17,746 ounces of refined gold, up 8.6% from 15,244 ounces and 23,420 ounces of refined silver, up 5.4% year-on-year from 21,178 ounces. Although production rose, gold prices dropped to an average of USD1,192 per ounce from USD1,290 per ounce whilst silver prices fell to USD16 per ounce from USD19 per ounce.
However, the miner responded by significantly reducing its cost of sales to only USD712 per ounce, which was 44% lower than the USD1,269 per ounce year ago. Its cash costs of USD489 per ounce was also down over 40% year-on-year from USD824 per ounce.
Cash at the end of the period stood at USD7.6 million, down from USD8.0 million at the end of December. It reduced its borrowings to USD20.8 million from USD26.1 million.
Trans-Siberian shares were up 5.3% to 9.48 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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