Is Beadell the bright spot in the gold space?

Beadell (BDR) has been receiving a lot of attention from the analytical world over the past month, with Goldman Sachs upgrading the stock to a conviction buy at the start of the year.

BDR’s low cost model and improving production shows there are bright spots in the rough space that is gold mining.

The release of part of its Q4 production update show its Tucano mine in Brazil saw gold recovery in  Q4 jumping 10.4% from the previous quarter to 60,823 ounces.

That saw total second half gold recovery coming in at 116,000 ounce which was a miss on managements’ expectations of 120,000 but the ramp up in Q4 should offset this disappointment of missing the half year estimates.

Cash costs haven’t been finalised yet, however on current estimates should be in the middle of the range $435 to $485 and with iron ore credits to be added it should be at the middle to lower end by the close of the quarterly books.

Beadell also achieved record gold sales for the quarter with 64,131 ounces sold in the December quarter compared to 43,529 in Q3 and expects this to continue into the early party of 2014.

The company also looked to capital management and states it has the ability to pay out A$54 million in debt repayments, plant upgrades and equipment this month.

The trade

This is a tidy result for the company and I will be watching the January 24 full production report closely. From a trade perspective, gold remains stuck in a bear market and that will be an underlying issue for the company.

Technically it has just switched over to the top Bollinger band having followed the bottom band all the way down to 64.5 cents. I would look to follow the trade up as the MACD is also supportive of the momentum. Therefore look to buy at market with a stop loss on the 20 day moving average - 77 cents.

I would have a floating limit as I would look for two signs to exit the trade one is a reversal in the gold price or two a clear break away from the top Bollinger band which is likely to happen around 92 cents. 

BDR share price

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