Report by Global Mining Research

In the face of meaningful cash surpluses, miners are repurchasing shares in record amounts. Some 40% of the Global Mining Research team’s gold coverage have active buybacks in 2025E, equating to ~US$3.7B of cash returns, a record level for the sector and equivalent to ~US$110/GEO. The impact on share prices is subject to debate. The team find that at spot gold the 2025E FCF yield of the sector after expected dividends and buybacks is ~4.6% (and ~8.5% in 2026E). So, shareholder return potential is still to the upside whilst gold prices remain elevated. Stocks least progressed (~20% or less) with buybacks include Carlyle Group, OceanaGold, Barrick Gold, Kinross Gold and Agnico Eagle Mines. Stocks trading at larger discounts to 2025E spot FCF include IAMGOLD, Torex Gold, Endeavour Mining, Equinox Gold and Wesdome Gold Mines. Preferred stocks of these are Kinross Gold, Agnico Eagle Mines, IAMGOLD and Equinox Gold.

Report by Global Mining Research

The Global Mining Research team research the correlation of stocks to the gold price and the beta of those stocks. The stocks with consistently high beta to the gold price over the past five years are Alamos Gold, Genesis Minerals, IAMGOLD, Kinross Gold, Lundin Gold and Torex Gold Resources. Stocks with a weak beta to gold price over the past five years are B2Gold, Centerra Gold, Endeavour Mining, Barrick Gold, Newmont and SSR Mining (except 2025), each with mine or management issues, heightened risk or M&A troubles. Market preference for gold stocks appears to be more driven by investor perception rather than quantifiable valuation or sensitivity measures, and investors are preferring stocks with “issues” and aren’t seeking deeply discounted cheap stocks. Preferred gold stocks are BUY-rated Agnico (delivery and lower-risk portfolio), Kinross (risk reduction and execution), Equinox (transitions from project development to cash generation), IAMGOLD (Côté ramp up and derisking) and Lundin Gold (FDN continues to outperform).

Report by Global Mining Research

Gold prices will always be volatile but two of the unexpected headwinds of 2022, inflation and USD strength, have now peaked. David Radclyffe reviews the outlook for the sector in 2023. He expects gold equity inflows as price and margin pressures of 2022 abate and the potential for surpluses return. M&A is expected to continue, and significant C-suite turnover offers opportunities to reset stale strategies. Preferred stocks are Barrick, Endeavour and B2Gold for scale/value, Northern Star and Evolution for leverage to better gold/copper prices and Lundin Gold and Centerra for attractive potential in smaller caps.

Report by Metals Focus

Metals Focus’ new annual report, The Gold ESG Focus, is due for release in July. The extensive report compares a wide range of senior gold producers, including the likes of Barrick Gold, Endeavour, IAMGOLD and others. Looking at topics such as emissions, water, waste, biodiversity and health & safety, the report features “apple versus apple” ESG comparisons for the included companies. Please contact us to find out more.

Report by Global Mining Research

Global Mining Research’s BUY and SELL signals served investors well in 2021 despite some market disconnect between equity price and numerous variables, including dividends. This year, David Radclyffe sees the gold sector shifting more to a growth/scale focus over returns/balance sheets; so, more M&A, growth investment, inflation impacting margins, lower dividends and a focus on ESG. David’s latest report looks for stocks that match the investment themes within the sector. Key picks include Agnico Eagle (new BUY signal), Barrick Gold, Northern Star Resources and Endeavour Mining.