Gold and silver stocks look promising in 2018. Here is a list and summary of stocks provided by OutSiderClub.com
Agnico Eagle Mines Limited (NYSE: AEM)
Agnico Eagle Mines Limited peaked at $85 per share in 2010, but at its lowest point in 2015, it was trading at around $22 per share. This means that Agnico Eagle lost three-quarters of its value within just five years.
Still, the company proved resilient.
It survived the worst of the bear market and has rebounded nicely since.
When we first recommended buying Agnico Eagle in December 2015, it was trading at just $26. Since then, it’s nearly doubled to its current level of $45. The company has a market cap of $10.5 billion.
Its durability is on full display.
The key is Agnico’s low-cost production.
The all-in sustaining cost (AISC) for Agnico is $845 per ounce. That’s kept the company profitable and has also allowed it to pay down its debt and acquire new assets.
In 2014, Agnico purchased a 50% stake in what was Osisko Mining’s Malartic mine. This contributed to an 18% increase in reserves and record high production in 2015.
Payable production in 2015 was 1,671,340 oz. of gold at total cash costs per ounce of $567. In 2016, the company registered 1,662,88 oz. at a total cash cost of $622 per ounce.
And now, the company is expecting average annual production of approximately 1.55 million oz. of gold through 2019 and 2 million oz. in 2020:
Agnico has also been one of the few mining companies increasing exploration (doubling its budget) while simultaneously cutting its debt.
The miner now boasts a debt-to-market cap ratio of less than 10% and $866 million in cash:
Agnico could do any number of things with that capital. It could acquire new assets, building onto its base, or weather another downturn in metals prices. It might also raise its $0.11 dividend, which currently yields about 1%.
Low costs, low debt, strong reserves.
Agnico has been, and will continue to be, one of the stronger mining investments in the game.
OceanaGold Corp. (TSX: OGC) (OTC: OCANF)
OceanaGold Corp. is an Australia-based miner. It’s much smaller than Agnico Eagle, but then again, so are its costs…
The company’s AISC was just $650 per ounce in 2017, with gold trading at twice that level.
Oceana’s gold output topped 400,000 oz. in 2015 and 2016, and it exceeded that level within the first three quarters of 2017. Full-year gold production is estimated to be between 550,000 and 600,000 oz. And it came up with some 19,000 tonnes of copper on top of that.
The company has $61 million in cash.
Yet, for some reason, the stock remains undervalued by the market, with its share price trailing gold since last spring:
In short, OceanaGold is looking at a few years of very strong profits, with the potential to improve long-term production at very low all-in costs.
Its stock ought to be worth more, given the circumstances.
Newcrest Mining Ltd (ASX: NCM) (OTC: NCMGY)
Newcrest Mining Ltd is Australia’s biggest gold miner, with operations in the Asia-Pacific and West Africa. It’s just one of four companies that holds more than one mine in the world’s top-30 producers list.
Its group AISC is $787 per ounce with its best-performing mine, Cadia, producing at just $227 per ounce. Cadia also has a reserve life of approximately 40 years, with 26 million oz. of gold reserves. The mine is the top-producing gold mine in Australia.
Another mine, Lihir, has an estimated 35 years of reserve life, with AISC of $804 per ounce. It has gold reserves of 28 million oz. and resources of 57 million oz.
In all, the average reserve life of Newcrest’s mines is about 27 years. That’s exceptionally good for the industry. If you look at the graph below, you’ll see that Newcrest leads the pack when it comes to mine life and AISC margin:
Its total reserves are also world class with an estimated 130 million oz. of gold, 95 million oz. of silver, and 19 million tonnes of copper.
Newcrest has shed $1.33 billion in debt over the last two years. That’s brought the company’s net debt and EBITDA ratio down to 1.5.