Shares of Centerra Gold (NYSE: CGAU), a gold mining company, rose 24% in the week leading up to Thursday at noon, according to S&P Global Market Intelligence. The surge was attributed to positive news about the company.
On Tuesday, the former administration in Turkey won the general election. This is good news for Centerra, which was waiting for ministry approval to restart production of gold dore bars after an Environmental Impact Assessment (EIA) was accepted. The lucrative Öksüt Mine had to stop gold dore bar production in March 2022 due to the discovery of mercury. A win for the former administration means fewer civil service changes and potentially fewer disruptions in the approval process.
Only a day later, the Turkish Ministry of Environment, Urbanization, and Climate Change approved the EIA for the mine in Öksüt. Centerra announced that it anticipates restarting full operations at Öksüt in the coming weeks.
What Does This Mean?
The approval is substantial because Centerra only has two mines currently in operation, the other being Mount Milligan Mine in British Columbia, Canada. Consider Öksüt’s importance, as Centerra produced 112,000 gold equivalent ounces from it in 2021, compared to 189,000 gold equivalent ounces from Mount Milligan in 2022.
How Should Investors React?
The increase in Centerra Gold’s stocks highlights the inherent volatility in gold mining stocks. Some investors will seek that out and will have been rewarded handsomely by Centerra this week. Buying a cheap gold ETF is an excellent way to diversify risk in a fascinating investment class.
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