Home Energy & Mining Gold Reserve Inc. (OTCMKTS:GDRZF) Q3 Earnings Down 89%

Gold Reserve Inc. (OTCMKTS:GDRZF) Q3 Earnings Down 89%

Gold Reserve Inc. (OTCMKTS:GDRZF) Q3 Earnings Down 89%
Gold Reserve Inc. (OTCMKTS:GDRZF) Q3 Earnings Down 89%

Gold Reserve Inc. (OTCMKTS:GDRZF) earnings took a significant hit in the first nine months of the year and especially in the third quarter. While the company is still profitable, the rate at which earnings are dropping is a point of concern.

Earnings Drop

Earnings for the first nine months of the year dropped 17% to 67.8 million compared to $81.8 million reported last year. For the three months, ended September 30, 2018, earnings dropped 89% to $3.7 million or $0.04 share. For the same quarter last year, the company reported earnings of $34.3 million or 0.36 a share.

Amidst the disappointing earnings results, Gold Reserve’s cash balance appears to be getting stronger by the day. The company has confirmed that it did receive $187.5 million in cash from its Venezuelan sovereign bonds. The bonds come with a market value of $88.5 million for a total of $276 million. The amount was paid in pursuant with to a Settlement Agreement with Venezuela.

Gold Reserve total cash in its balance sheet stands at $82 million upon redeeming all its convertible debt in 2017 as well as paying of corporate expenses. The cash balance also includes $22 million held in Trust account at Bands Bank.

According to President Doug Belanger, they continue to collect amounts owed under the Settlement Agreement amidst the challenges that Venezuela continues to face. The company remains confident of collecting the remaining amount, $765 million, under the settlement agreement.

“We expect to distribute to our shareholders, net of certain required payments and subject to applicable regulatory requirements and sufficient reserve for operating expenses and other obligations, a substantial majority of any remaining amounts in the most tax-efficient manner possible,” Gold Reserve in a statement.

During the quarter, Gold Reserve completed NI-43-101 compliant Preliminary Economic Assessment on its Siembra Mineral Project. The company also completed preliminary design and cost estimates and related tailings dam facilities for a small plant.

Price Analysis

Gold Reserve has underperformed for the better part of the year. The stock has continued to trade in a tight trading range – between $2.00 and $2.80. However, the posting of the third quarter results appears to have averted a further slide in the stock as the stock has since bounced back after plummeting below the $2 a share.

The stock faces immediate resistance at the $2.80 mark, a breach of which might open the door for bulls to push the stock higher. Above the $2.80 mark, the stock should be on its way to the $3.50 a share handle. However, given the underlying long-term bear trend, Gold Reserve possibly remains susceptible to further declines.