The Canadian gold mining stocks on our list boast superior free cash flow yields
SmallCapPower | May 12, 2020: The gold mining industry is expected to have a good year in 2020 given the record amount of global monetary stimulus that has propelled the gold price to its current level of US$1700 per ounce. Those companies with a history of superior profitability are poised to perform best during a rising gold price environment. Today we have identified three Canadian gold mining stocks that are most profitable based on free cash flow yield, a metric that gives investors an indication as to how much cash a business is generating after taxes relative to how much it costs to operate.
*Returns are based on closing stock prices as of May 11, 2020
Alacer Gold Corp. (TSX:ASR) – $7.87
Alacer Gold is an intermediate gold producer that owns an 80% interest in the Çöpler Gold Mine in Turkey. The Çöpler mine operated at All-In Sustaining Costs (AISC) of US$700 per ounce during the first quarter of 2020, generating $47 million of unlevered free cash flow during the period. On May 11, 2020, Alacer Gold announced an “at-market merger of equals” with SSR Mining Inc. Alacer Gold had a free cash flow yield of 13.9% at the end of 2019.
- Year-to-Date Return: 14%
IAMGOLD Corporation (TSX:IMG) – $5.02
IAMGOLD is a mid-tier mining company with three gold mines on three continents, including the Essakane mine in Burkino Faso, the Rosebel mine in Suriname, and the Westwood mine in Quebec. The Company is also developing its Côté Gold project in Ontario and its Boto Gold project in Senegal, and has greenfield and brownfield exploration projects in various countries located in West Africa and the Americas. IAMGOLD had a free cash flow yield of 5.7% at the end of 2019. - Year-to-Date Return: 4%
B2Gold Corp. (TSX:BTO) – $7.32
B2Gold is an international gold producer with operating gold mines in Mali, Namibia and the Philippines and numerous exploration and development projects in various countries including Mali and Colombia. The Company reported consolidated gold production of 250,632 ounces during Q1 2020, an increase of 25% from the same period last year, at AISC of US$695 per ounce sold. BTO also raised its quarterly dividend by 100% to US$0.02 per share. In 2020, B2Gold forecasts consolidated gold production of between 1,000,000 and 1,055,000 ounces. BTO had a free cash flow yield of 5.1% at the end of 2019.
- Year-to-Date Return: 41% (Excluding dividends)
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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