The junior gold stocks we’ve discovered have higher cash costs and should outperform in a rising gold price environment
SmallCapPower | February 1, 2019: The gold price has increased ~US$100/oz since early November 2018, sparking interest in sector once again. Today we highlight five junior gold stocks with high relative cash costs in their last reported quarter. These cash costs indicate a high leverage to the metal, which creates more torque in a rising gold price environment. Ideally, these companies should go up the fastest, as the gap in margins are significantly wider, relative to lower cash cost companies.
*Share prices as at close January 29, 2018, data obtained from S&P Capital IQ
TMAC Resources Inc. (TSX:TMR) – $6.73
TMAC Resources is a gold mining company located on a 1,100-square kilometer property in Nunavut, Canada. Its principal asset, the Hope Bay Property, hosts a Measured & Indicated resource of 4.91M oz Au at an average grade of 8.6 g/t Au. On January 23, the Company announced a 60,000-meter drill program for 2019. The program targets an increase in its reserves and resources at the Doris deposit, looking to upgrade its Madrid North deposit. As of Q3/2018, TMAC Resources reported cash costs of $1,077/oz sold, and AISC of $1,898/oz sold.
Guyana Goldfields Inc. (TSX:GUY) – $1.72
Guyana Goldfields is a 150,450 oz open-pit gold producer located in Guyana. Its only operating mine is the Aurora Gold Mine located in Guyana, which is one of the largest gold mines in the country. On October 30, the Company announced Q3/18 operational and financial results and reduced its 2018 production guidance downwards from 175,000-185,000oz to 150,000-155,000oz at cash costs of US$1,030 -US$1,055/oz, which caused the stock to go down 48% in one day. Most recently, the Company announced the restructuring of its Country Office in Guyana, promoting Guyanese nationals to key management positions at its Aurora Gold Mine. As of Q3/2018, the Company reported cash costs of US$958/oz sold, and AISC of US$1,094/oz sold.
IAMGOLD Corp. (TSX:IMG) – $4.74
IAMGOLD is an 810,000-870,000oz mid-tier gold mining company, with active mines in Quebec, Canada; Burkina Faso, West Africa; and Suriname, South America. On August 8, 2018, the Company released its consolidated financial and operating results for Q2/2017, reporting net loss attributable to equity holders of $26.2 million, which included impairment charge reversals of $524.1 million, relating to its Côté Gold Project, causing the stock to decrease 27%. As of Q3/18, the Company reported cash costs of US$830/oz produced, and AISC of US$1,086/oz sold.
- Market Cap: $2.2 Billion
- 1-Week Total Return: +23.44%
- 1-Month Total Return: -5.39%
- Y/Y Change: +6.2%
Jaguar Mining Inc. (TSX:JAG) – $0.21
Jaguar Mining is Canada-based gold company operating in Brazil. The Company has two active mines and several exploration projects. The Company has a strong exploration pipeline initiative for its mines in Turmaline, Pilay, and Roca Grande. On August 15, 2018, the Company released its Q2/2018 financial results, revising its 2018 production to 80,000-85,000 oz, resulting in a 29.6% decrease in stock price in one day. As of Q3/2018, the Company reported cash costs of US$627/oz sold, a 26% decrease from Q3/2017, and AISC of US$1,142/oz sold.
Superior Gold Inc. (TSXV:SGI) – $0.78
Superior Gold is a Canada-based gold producer operating in Australia. It operates the Plutonic Gold Mine in Perth, Western Australia. The Plutonic Gold operations include the Hermes open-pit mine and the Plutonic underground mine. On April 3, 2018, the Company announced that its underground reserves estimate at its Plutonic operations had tripled, with total mineral reserves across all projects doubling to 382,000 oz. The Company sold over 25,800 oz in Q3/2018, a 24% increase from Q3/2017, however, the Company reduced its 2018 production guidance from 100,000-110,000 oz to 92,500-97,500 oz. As of Q3/2018, the Company reported cash costs of US$1,042/oz sold and AISC of US$1,119/oz sold.
- Market Cap: $72.98 Million
- 1-Week Total Return: +8.33%
- 1-Month Total Return: -7.1%
- Y/Y Change: +9.0%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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