Shares in gold miner Centerra Gold (NYSE: CGAU) were up 24% in the week to midday Thursday, according to data provided by S&P Global Market Intelligence. The move comes after a couple of days of positive news for the company.
First, the stock rallied on Tuesday as the results of the general election in Turkey resulted in a victory for the former administration. That’s a plus because Centerra was awaiting ministry approval to restart production of gold dore bars after having previously accepted an Environmental Impact Assessment (EIA).
As a reminder, Centerra was forced to shut down gold dore bar production in March 2022 following the discovery of mercury at the Öksüt Mine. A win for the former administration implies fewer civil service changes and potentially less approval process disruption.
Fast-forward a day later, and Centerra was pleased to announce the Turkish Ministry of Environment, Urbanization, and Climate Change had approved the EIA for the mine in Öksüt. Centerra “expects to restart full operations at Öksüt in the coming weeks.”
The approval is significant, given that Centerra only has two mines currently in operation; the other is Mount Milligan Mine in British Columbia, Canada. For an idea of Öksüt’s importance, consider that Centerra produced 112,000 gold equivalent ounces from it in 2021, compared to 189,000 gold equivalent ounces from Mount Milligan in 2022.
The move highlights the inherent volatility in gold mining stocks. While some investors will actively seek that out and have been handsomely rewarded by Centerra this week, another practical option would be to buy a cheap gold ETF. It’s an excellent way to diversify risk in a fascinating investment class.
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