There are hundreds of small cap gold miners listed on US exchanges but only a handful that are actually producing meaningful amounts of gold. For the ones that are producing, an interesting metric to look at is the "Cash Cost" of an ounce of mined gold.
Cash costs, in mining lingo, is the cost of production at a site per unit of output. Cash costs include operational cash costs at site level. This includes things like transport, refining , administrative costs and royalties.
The value of the by-products is deducted from the final cash cost of the metal. For example, if a gold mine produces copper as a by-product, then the value of the copper produced will be deducted from the cash cost of the gold. This is the usual accounting treatment for by-products in most industries. Taking a somewhat random sample of producing small cap miners on various exchanges we see that the cash cost ranges from the low $300 range all the way up to $665. Minefinders (MFN) and Capital Gold (OTCPK:CGLD) both are executing well in reducing mining costs, but an investor should not look solely at this metric when making a decision. The key for small cap companies is whether they can keep cash costs under control as they bring new mines online and scale the business.
|Company||Exchange||Market Cap (US$ MM)||Cash (US$MM)||Debt (US$MM)||Cash Cost 2010-2011E|
|Capital Gold (OTCPK:CGLD)||NDAQ||$187||$7||$9||$330|
|Romarco Minerals (NYSE:R)||TSX||$646||$20||$2||$395|
|New Gold (NYSEMKT:NGD)||AMEX||$1,500||$137||$170||$407|
|Great Basin (NYSEMKT:GBG)||AMEX||$647||$140||$65||$432|
|Alamos Gold (NYSE:AGI)||TSX||$1,382||$119||$1||$442|
|Allied Nevada (NYSEMKT:ANV)||AMEX||$1,180||$23||$9||$455|
|Northgate Min. (NXG)||AMEX||$961||$88||$56||$508|
|Aurizon Mines (AZK)||AMEX||$775||$56||$22||$547|
|Gammon Gold (GRS)||NYSE||$1,442||$25||$49||$564|
|Wesdome Gold (WDO)||TSX||$233||$8||$12||$611|
|Claude Resources (NYSEMKT:CGR)||AMEX||$131||$0||$22||$650|
|Alexis Minerals (NYSE:AMC)||TSX||$78||$12||$1||$665|
|Source: 2009 Company Filings|
|Canadian Dollars converted to US Dollars price as of 1/6/09 date|
Disclosure: No positions