After the closing bell on Wednesday, Turquoise Hill Resources Ltd. (NYSE:TRQ) issued its first-quarter results.
As a result of the strong start to the year made by the Oyu Tolgoi mine in Mongolia, the Canadian miner increased copper and gold production, sold a higher volume of gold concentrate and could sustain a lower cash cost per ounce.
Copper production increased 18% year over year to 45,800 tons and gold output grew 188% year over year to 120,000 ounces.
Driven by higher gold sales volumes, revenue grew 43.6% to $352.7 million, beating expectations by $56.76 million. GAAP earnings were 6 cents per share, topping estimates by 3 cents.
For full fiscal 2019, the miner is on track to produce between 125,000 and 155,000 tons of copper and between 180,000 and 220,000 ounces of gold concentrate.
Turquoise Hill Resources also forecasts sustaining operating cash costs of about $825 million and allocating $1.515 billion for capital expenditures, of which 12.2% will be for maintenance of operations and 87.8% for the development of mineral projects at Oyu Tolgoi.
In addition, cash costs should range between $1.75 and $1.95 per pound of copper produced.
As of March 31, the company has $1.54 billion in cash on hand and equivalents, $9.24 billion in plant and equipment and $4.2 billion in debt. The equity is worth approximately $8.5 billion.
The stock was trading at $1.3 per share at close on Wednesday for a market capitalization of $2.55 billion. The share price fell 57% over the past year through May 15 to below the 200-, 100- and 50-day simple moving average lines.
The 52-week range is $1.23 to $3.
The 14-day relative strength index of 27 suggests that the stock has reached oversold levels.
Based on the overweight recommendation rating issued by analysts, Turquoise Hill Resources will outperform the industry within 52 weeks.
The average target price of $4.36 per share reflects 211.4% upside from the closing price on Wednesday.
Disclosure: I have no positions in any securities mentioned.
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