Allied Nevada Gold Drops After Mill Project Postponed

Allied Nevada Gold Corp., the operator of the Hycroft mine in Nevada, fell the most in more than four years after posting a drop in earnings and deferring plans to build a processing plant at the site.

Allied Nevada, which said in April it might build the 130,000-ton-a-day mill in phases, declined 26 percent to $4.37 in New York, the biggest slide since December 2008.

Second-quarter net income fell to $4.23 million, or 4 cents a share, from $6.14 million, or 7 cents, a year earlier, the Reno, Nevada-based company said today in a statement. Revenue rose 75 percent to $59 million.

Production and sales from Hycroft, in northern Nevada, didn’t meet forecasts because of problems with the leach-pad process, which is used to extract metal from the ore, Allied Nevada said July 22. The company, which is working on a plan to improve leaching, is also grappling with gold prices that have dropped 23 percent this year.

“Cash flow from operations remains weak, partly resulting from the sharp gold and silver price declines during the second quarter,” Allied Nevada said in today’s statement.

The company said it will defer construction of the mill at Hycroft until it has completed a new feasibility study to optimize the project. There’s no forecast on how long that may take or what the project may eventually cost, Allied Nevada said.

Hycroft will process at a reduced rate until 2021, Adam Graf, a New York-based analyst at Cowen Securities LLC, said in a note today.

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