The Medusa Mining Limited (ASX: MML) share price is on a tear, up 13% in late afternoon trading today. That puts the gold producer’s share price up 22% so far in August and up 48% over the past full month.
By comparison, the All Ordinaries Index (ASX: XAO) has gained 3.6% in August and 2.6% over the last full month.
Year-to-date Medusa’s share price is up 29%. And that’s after plunging more than 42% from 24 February to 19 March during the COVID-19 market panic.
Investors who bought at the March low and held onto their shares won’t have anything to complain about today. Since that low, Medusa’s share price has gained a whopping 164%.
The company has a current market cap of $217 million.
What does Medusa Mining do?
Medusa is an Australian-based gold producer, focused on growth in the Asia Pacific Region. Its current projects are the Royal Crowne Vein Prospect and the Co-O underground mine, both located in the Philippines
Medusa listed on the ASX in December 2003.
Why is Medusa’s share price up 48% in the last month?
While there have been no new announcements today to readily explain Medusa’s 13% intraday share price rise, its monthly gains can be attributed to several factors.
First, as a gold producer, Medusa’s share price obviously stands to benefit from any increase in the price of gold. And over the last month, the yellow metal has gained 10%, currently trading for US$1,991 (AU$2,765) per ounce. Year-to-date gold is up 31% in US dollars.
Another likely driver for Medusa’s fast rising share price is that unlike some of its rivals, including Regis Resources Limited (ASX: RRL) and Evolution Mining Ltd (ASX: EVN), the company did not hedge its gold. This means it didn’t opt to sell the gold it’s producing today several months ago at lower prices. While that may have seemed like a good idea at the time for some gold miners, they’re certainly regretting that with today’s near record gold prices.
Medusa’s share price also received a boost with the release of its quarterly report on July 27. The report noted the company’s operations had been impacted by the pandemic, but total cash and cash equivalent on metal account at quarter end still increased roughly 45% to US$47.1 million.
The company also reported its had achieved production guidance for FY2020, with 95,057 ounces of gold produced for the year at an AISC of US$1,132 per ounce. This came in slightly higher than the top end of guidance.
Medusa’s share price could see more big moves – up or down – when the company releases its production and cost guidance for the 2021 financial year at the end of August.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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