Top 15 Gold And Silver Mining Producers For 2019

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Includes: AG, ALO, ARNGF, CDE, EGO, EQXFF, EXK, HL, IAG, LMCNF, MUX, PAAS, SSRM, TGCDF, TPRFF
by: Don Durrett
Summary

I consider these the best risk/reward gold and silver producers.

All have large resources and solid production numbers.

All are highly leveraged to higher gold/silver prices.

All are in good locations and have quality management teams.

Below is a list of 15 gold and silver producers. I chose these stocks based on the following criteria:

  1. Solid producing properties.
  2. Good locations.
  3. Quality management teams.
  4. Significant upside potential.
  5. The likelihood to perform well if gold and silver prices rise.

Some of the stocks on this list have less than stellar balance sheets or high cash costs. Thus, some of them carry high risk. It is important that you do your own due diligence to understand the risk involved. The key risk is if gold and silver prices fall. Some of these stocks can fall 25% in a day if gold and silver prices fall. They can also rise 25% in a day if gold and silver prices rise.

I like this list of stocks because they are mostly mid-tier producers, with a few emerging majors. These are the stocks will "perform" if gold and silver prices rise. All of them are highly leveraged to higher precious metals prices. The mid-tiers are the stocks that generally have the best risk/reward profiles. The reason why is because they generally are growth-oriented stocks and have a strong enough balance sheet to find a way to grow. It's not unusual at all to see a mid-tier producer double or triple in size in a short period of time.

I personally like to buy mid-tier producers with an FD market cap valuation around $150 million. Often this requires a lot of patience and years of waiting for corrections. If you are a long-term investor, then you want to get the best entry price you can. But I also know that gold has been in a 7-year correction which could be ending. We might be at a time where you can no longer be patient and you have to buy mid-tiers at higher valuations.

What I do know is the HUI is at 160 today and was trading above 600 during the last high in 2011. The HUI is an index that includes mostly large cap gold producers. That means the stocks on this list will likely outperform the HUI. If you do the math, you will recognize that those are outsized potential returns.

So, if we do get a new cycle in gold and a new high, the mid-tiers are going to do exceedingly well. And, all we need for that is higher gold prices. It's really that simple. The chance of mining costs exploding at the same time that the price of gold is exploding is very unlikely. Instead, their free cash flow will likely be exploding.

When we put two and two together, we realize that we have a few choices to make. First, which mid-tiers do I want to own? Do I focus on those with lower FD market caps with much larger upside potential, or do I focus on the stronger stocks that have a much better risk/reward profile. As far as I am concerned, the risk/reward profile is the most important factor on which stocks I buy. If the reward is marginal or the risk too high, then I am likely to pass.

The next question is what kind of return do you want? It should be high, or else you shouldn't be interested in gold miners. These stocks have too much risk to be chasing after marginal returns. I like Eric Sprott's philosophy, which is to find a way to steal return. How do you do that? By recognizing when a stock is cheap versus its risk. And I submit that many of the mid-tier producers are extremely cheap versus their risk.

Now, stealing return is not easy. It takes at least 2 years to learn how to invest in gold miners, and all 2 years gets you is entry into the rookie club. This is not easy to learn because of all of the data points that impact mining. When you are a rookie, or still in your 2 year probation period, focus on producers. They have the best risk/reward profile. Majors have low returns and juniors are too difficult to analyze unless you have 5+ years of experience.

I have 800 gold and silver mining stocks in my database, and I analyze all of them. In fact, I have been analyzing the stocks listed below for years. Most of them I have analyzed more than 5 times (usually once a year). I know all of the producers, and I know their strengths and weaknesses. These are the good ones.

Of course, even the good ones can get into trouble if gold and silver prices fall. But if gold and silver prices rise, I want to own several mid-tier producers. I may own a few majors and a few juniors, but what gets me excited are my mid-tier producers.

This list is in alphabetical order. I could have easily listed many more producers because gold and silver prices are currently down. I excluded stocks that have very high risk or low upside potential. If your stock is not on this list, post a question below and I will give you my opinion on why it didn't make the list.

Stock Name

Symbol (US)

Category

Share Price (US)

FD Shares

FD Mkt Cap 1/5/19

Alio Gold

ALO

Gold Producer

$1.00

94M

$93M

Alio Gold (previously Timmins Gold) is a mid-tier producer in Mexico and Nevada. They began producing in 2010 at their San Francisco mine. They plan to produce about 700,000 oz through 2025 at San Francisco in Mexico. All-in costs are around $1,200 per oz. Costs were up, and production was down in 2018 from lower grades. This is one of the reasons their share price crashed from $6 to 65 cents in the past 18 months (currently back to $1). However, the grades and production will increase in 2020 after they complete stripping in 2019.

In 2015, they purchased Newstrike Capital. This allowed them to add the Ana Paula project, which is a 2 million oz (2 gpt) open project with about $600 per oz. cash costs. It has a high IRR over 40% at $1,300 gold. Ana Paula will give them 115,000 oz of production for about 10 years. They have currently stopped development on Ana Paula and is another reason the stock has crashed. It still requires more permitting and a feasibility study. The PFS capex was $137 million.

In 2018, they acquired Rye Patch Gold, which had four properties in Nevada. This gives them the producing Florida Canyon mine, which adds 75,000 oz. in additional production (after they ramp up production in 2019. The bad news is that with all-in costs around $1,200 per oz., it makes both of their mines vulnerable to lower gold prices. Investors were not excited by the merger.

They sold three of the projects they got from the Rye Patch merger (Wilco, Lincoln Hill, and Gold Ridge) for $19 million in Coeur Mining shares. This fire sale shows a company going through difficulty and another reason investors have jumped off the ship. The good news is they have low debt ($9 million) and low share dilution (94 million shares) and three solid properties. Plus, significant exploration potential at Ana Paula and Florida Canyon.

This is a company going through hard times, but still has significant upside potential and a good risk/reward profile from this valuation. Previous investors have been beaten up, going through a 10 to 1 reverse split in 2017. I also didn't like the name change from Timmins Gold. Why change the company name when it had good name recognition? That was strange. Then, the sale of the Rye Patch properties was unsettling. However, even with all of this negativity, they have a very good chance of becoming a 200,000 oz. producer after Ana Paula is built.

Stock Name

Symbol (US)

Category

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Argonaut Gold

ARNGF

Gold Producer

$1.22

183M

$233M

Argonaut Gold is a mid-tier producer. There is a lot to like about this company. Their production is forecasted to grow from 170,000 oz. in 2018 to 200,000 oz. in 2019. They have three producing mines in Mexico with all-in costs (free cash flow) around $1,100 per oz. They have three more mines to build (two in Mexico and one in Canada), and all of them are similar. This is a very smart company that purchases economic projects with solid resources, low capex, and moderate cash costs. All of their mines should produce 80,000 to 150,000 oz. at moderate cash costs.

They have $21 million in cash and $8 million in debt. It's amazing that a growth company that has purchased 2 companies (Pediment Exploration and Prodigy Gold) and a large project (San Agustin), and built three mines, has very little debt. They need to build 3 more mines, so that will take some debt.

Their largest mine (Magino) has not been built yet. It has 4 million oz. and $320 million capex. Plus, it is in Ontario, Canada. Cero Del Gallo is a 900,000 oz. (.6 gpt) open pit in Mexico. It probably needs higher gold prices to get built. San Antonio (1.7 million oz. at .8 gpt) that is currently being permitted.

Anyone who analyzes gold mining stocks has to be impressed with this stock. Management has done a good job building and operating mines. They now have 8 million oz of M&I and nice pipeline of projects to develop. The only question to ask is how big is this company going to get? Their target is 300,000 to 500,000 oz. My guess is that they will continue to buy projects and build mines. With an FD market cap of $233 million, the upside potential is significant. My only concern is that they get taken out by a larger company, or higher taxes/royalties in Mexico.

Stock Name

Symbol (US)

Category

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Coeur Mining

CDE

Gold Producer

$4.84

200M

$968M

Coeur Mining has underperformed since 2006. They have to reach $70 per share just to get back to where the share price traded in 2006. However, they have been aggressive, purchasing Orko Silver, Paramount Gold, and a mine from Gold Corp. In 2018, they will produce about 12 million ounces of silver and 350,000 ounces of gold. That is substantial, and with rising gold and silver prices, cash flow could reach $1 billion annually. At 10x cash flow, they could reach a $10 billion market cap. That would give them high upside potential from their current $1.3 billion FD market cap. The stock had been surging, rising from $2.48 to $14.94 in 2016, but is now back to $5.43 because of high costs.

They are currently producing about 35 million oz. of silver equivalent (including gold), with all-in costs (free cash flow) around $14 per oz. So, they are a high-risk investment at low gold and silver prices. However, if gold and silver prices take off, they will benefit big time.

I look for this stock to do well, although they need to find some production growth. Their new management team has focused on improving their balance sheet. However, they still have $420 million in debt and only $123 million in cash. With more free cash flow, they can clean up their balance sheet.

They have become mostly a gold producer, with 59% of revenue from gold and only 36% from silver. However, that could balance out if silver outperforms gold.

Stock Name

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Eldorado Gold

EGO

Gold Producer

$3.27

165M

$538M

Eldorado Gold is a large mid-tier producer. They have been a growth-oriented company. They have 4 operating mines, plus 3 more being developed. Production will rise from about 250,000 oz. to 500,000 oz. in 2021 after these 3 mines are built. Plus, if they resolve a permitting issue in Greece at their large Skouries project, they will add another 200,000 oz.

Investors did not like to hear about permitting problems at Skouries, and their share price crashed 70%. Now, they are cheap, with futures reserves valued around $20 per oz. They have 17 million oz. (1.3 gpt) of reserves and 40 million oz. (1 gpt) of resources.

I like their cost structure with cash costs around $600 per oz. and all-in costs around $1,000. Plus, all of their development projects have moderate to low cash costs. They will have high cash flow and are leveraged for higher gold prices. Their balance sheet is okay, with $379 million in cash and $595 million in debt. Most of their debt ($512 million) is not due until 2022.

As an income stock, they are a good one. If you invest at this low valuation, you could easily get a 5% or higher annual dividend (at higher gold prices) on your investment today. One red flag with this company is that some of their mines are in Turkey. One of these could have a political issue, which would hurt the stock. That said, with their low cash costs and growth-focused management team, I look for them to do well.

Stock Name

Symbol (US)

Category

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FD Mkt Cap 1/5/19

Endeavour Silver

EXK

Silver Producer

$2.27

136M

$30M8

Endeavour Silver is a silver producer in Mexico. They have 4 high-grade silver/gold producing mines, with expected production of 10 million oz. (silver equivalent including gold) in 2019. They are expanding production and reserves, projecting 12 million oz. (silver equivalent) by 2020. They have high cash costs ($10 per oz.) and high all-in costs (free cash flow) around $18 per oz. But their next two mines have lower cash costs and should reduce their all-in costs.

They have $28 million in cash and no debt. I'm somewhat surprised that their share price has held up with their high costs. They lost money last quarter and are burning through cash. But investors like their growth potential, and they are one of the few pure silver miners with no base metals.

Strong silver producers like Endeavour could really fly if we have a mania in mining stocks, because there are so few pure silver producers. Look for Endeavour to use their cash flow and exploration to grow production. Their management team and properties are solid.

The only thing that could fatally hurt them is sub $15 silver prices for an extended period. However, they do not have any debt, so they can raise money both from an equity financing or using debt. I'm not that concerned about them surviving for the long term. This is a company that should thrive with silver prices over $20.

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Equinox Gold

OTCPK:EQXFF

Gold Producer

$0.81

697M

$570M

Equinox Gold was formed in 2017 from a merger between Trek Mining, NewCastle Gold, and Anfield Gold. They have 11 million oz. of gold and have a goal of producing 600,000 oz annually. They are producing 135,000 oz. (Mesquite in California), which will double to 270,000 oz. (Aurizona in Brazil) in 2019. Then, in 2020, they will add another 200,000 oz. (Castle Mountain in California). Ross Beaty is the Chairman and wants to build a large gold producer. He is the also the Chairman of Pan American Silver, which was the founder.

They also have a 350 tpd toll mill (Koricancha) that provides approximately $5 million in free cash flow. Other projects include: Warintza, a 1.8 billion lb copper project in Ecuador; Elk, a 400,000 oz. (6 gpt) gold project in British Columbia; and Ricardo, an early exploration gold project in Chile on 42,000 acres. Plus, they have a 30% JV with AngloGold Ashanti (NYSE:AU) for 500,000 acres in Brazil. The key to this stock will be production and resource growth, along with higher gold prices.

With a $510 million FD market cap, they are currently pricey, but they have the potential to become a growth stock. In fact, their long-term goal is to increase production to 600,000 oz. annually. With Ross Beaty in charge, they will likely accomplish their goal. I expect this stock to do very well.

Quote From Ross Beaty (Interview in 2018):

So really the philosophy of Equinox Gold is to build a really big producing gold company as quickly as we can and get just massive leverage to gold for the "happy time" when the gold market turns and it becomes a bull market again. With a rise in price that will float our ship and become an industry leader in terms of return to shareholders, in terms of income statement and ultimately dividends.

So, what does intermediate mean? We're going to be probably producing somewhere between 300,000 and 600,000 ounces in the next few years.

Stock Name

Symbol (US)

Category

Share Price (US)

FD Shares

FD Mkt Cap 1/5/19

First Majestic Silver

AG

Silver Producer

$6.21

203M

$1260M

First Majestic Silver is a large silver producer in Mexico. Until recently, they were a very strong company with a clean balance sheet and low costs. Now, they have $146 million in debt and lost money last quarter. With only $72 million in cash, their risk has increased substantially. Their all-in costs are around $16 per oz. (silver equivalent), and perhaps as high as $17 per oz. This added risk has lowered their valuation and made them attractive as a high return stock.

They will produce 23 million oz. of silver equivalent in 2019 (91% of their revenue comes from silver and gold). With this much production, they have huge leverage for higher silver and gold prices. They have 6 producing mines in Mexico.

They have the potential to create over $1 billion in free cash flow at $100 silver prices. At a 10x free cash flow valuation, FM should be worth at least $10 billion at $100 silver. That is my expectation as long as Mexico doesn't increase taxes and royalties, and FM hits their production and cost targets.

The red flag for this stock is their high all-in costs, but they have one of the best management teams in the business and should survive a downturn. Their other red flag is their resource total. They only have 196 million oz. (silver equivalent) of reserves. That seems like a lot, but they plan to increase production to at least 25 million oz. (silver equivalent) per year. That is only 8 years of current reserves. Thus, maintaining production could be an issue down the road and could hurt their share price. After all, there are not very many large silver mines left to develop.

Stock Name

Symbol (US)

Category

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Gran Colombia Gold

TPRFF

Gold Producer

$2.45

63M

$154M

Gran Colombia Gold has turned things around. They had serious debt issues, and their stock price crashed. However, they expanded production and lowered their cash costs. Now, they have their balance sheet under control. They have $25 million in cash and $73 million in debt. They are paying off their debt quarterly until 2024.

Investors are still avoiding the stock because of previous issues, but it has big upside potential. They have large resources (10 million oz. gold) and are targeting 400,000 oz. of production long term. They are currently producing about 200,000 oz. (at Segovia and Marmato) with cash costs about $750 per oz. and all-in (free cash flow) around $1,150 per oz. With these all-in costs, their balance sheet continues to improve.

I have some concerns with their large 8 million oz. Marmato project. They have switched the project to underground, which is only about 3 gpt. That is low grade for an underground project. The cash costs will not be that good. The good news is that the grade increases at depth, and they will likely have a mine of some size. Currently, they are producing about 25,000 oz. at Marmato. Their goal is to increase this total.

This stock has some red flags. The first is the mine life at Segovia. It only has about 1 million oz. of M&I resources, plus another 1 million inferred. Currently, they are mining about 190,000 oz. That gives it about an 8-year mine life. Can Marmato replace this production if they can't extend the mine life? That adds risk. Their other red flag is their debt, although I think this will easily get paid off.

Stock Name

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Hecla Mining

HL

Silver Producer

$2.57

482M

$1238M

Hecla Mining used to be mostly a silver mining company. However, gold is now 50% of their revenue, and they just acquired Klondex Mines, which is a gold producer. They used to be a low-cost silver producer, but they lost $23 million last quarter. Now, they have a poor balance sheet with $550 million in debt and only $60 million in cash. A lot of that debt is due in 2021, so there is high-risk with this stock. To matters worse, their large Lucky Friday mine (6 million oz. producer) has been down for about a year due to a labor strike.

2018 was a terrible year for Hecla. They show $100 million in free cash flow in their current company presentation, but their cash balance dropped from $200 million to $60 million. My guess is their free cash flow (break-even cost) is close to being negative at $15 silver and $1,250 gold. I think they are losing money on silver at $15 silver, but make a profit on gold at $1,250 gold. Combined, they are making a slight profit. But that is not enough to pay off their debt.

Hopefully, their fortunes will turn in 2019. The good news is they should have enough low-cost producing mines to survive a downturn in prices. Their Greens Creek mine in Alaska is world class. That mine alone is probably worth their current market cap. They have huge resources (10 million oz. of gold, and 700 million oz. of silver). But their costs and balance sheet are currently killing their share price.

This is a company with huge leverage to higher metal prices. They have several development projects. In the long term, they could easily double silver production. They have two large projects in Montana (250 million oz.) that are almost permitted. And they recently acquired Klondex Mines that has big potential in Nevada for increasing gold production.

They just need to survive these low precious metals prices. I'm concerned with more share dilution. If gold and silver prices don't rise in 2019, their share price could easily drop below $1 due to dilution. Investors are going to run from their high debt, share dilution, and labor problems at Lucky Friday.

There are few mid-tier producers with their resources and pipeline of projects. As a high-risk speculation bet on higher metals prices, it looks pretty good. With their management team and large number of quality properties, this stock is going to blast off if metals prices rise.

Stock Name

Symbol (US)

Category

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FD Mkt Cap 1/5/19

IAMGOLD Corp

IAG

Gold Producer

$3.81

468M

$1783M

IAMGOLD Corp is an emerging major, with production at 850,000 oz. They have 4 operating mines in Suriname (northern South America), Canada (Quebec), Mali, and Burkina Faso. They are currently building a large gold mine in Ontario (Cote with 7 million oz.) and are spending millions on exploration and advancing properties. I consider this a growth stock. Their cash costs are currently about $800 per oz., with all-in costs (free cash flow) around $1,150 per oz. The gives them around $100 million in free cash flow at $1,300 gold.

They also have two additional development stocks in West Africa. Boto (Senegal) is 1.5 million oz. at 1.8 gpt and Sribanye (Mali) is 1 million oz. at 1.7 gpt. Plus, they have a few more exploration plays that could become mines. They are giving guidance to reach 1.2 million oz. of production in 2022, with all-in costs (free cash flow) of $1,100 per oz.

Their balance sheet is okay with $775 million in cash and $393 million in debt. With an FD market cap of $1.9 billion, this stock is undervalued. It's a good income investment for future dividends. In fact, this stock has solid upside potential in the long term at higher gold prices. If that happens, your dividend could be around 5%+ in the future if you invest today.

Their only red flag is the location of some of their producing mines in West Africa (Mali and Burkina Faso). While both of these countries are safe today, they do have long-term political risk. You could consider their debt a red flag, but as long as they do not add any more debt, their balance sheet is pretty strong for the size of the company. Plus, with their cash flow they should clean up their debt.

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Leagold Mining

LMCNF

Gold Producer

$1.48

347M

$516M

Leagold Mining is a new company that is mostly run by the Endeavour Mining team. The purchased the Los Filos mine in Mexico from Goldcorp for $280 million. They used $150 million in debt and the rest through equity financing. Los Filos is a large open pit and underground mine, producing 200,000 oz. a year at $850 per oz. cash costs. This is the project that got them started.

After Los Filos, they acquired Brio Gold in 2018 and added 150,000 oz. of production. In 2019, they will produce around 350,000 oz. with cash costs around $750 per oz. That's impressive growth for a new company. And their strategy is to continue to grow production. They have 4 producing mines (Los Filos in Mexico), (Fazenda, RDM, and Pilar in Brazil). Plus, they are developing a 5th mine (Santa Luz in Brazil) that will add 100,000 oz. of annual production.

They have plenty of resources at around 20 million oz. (1.3 gpt) to grow production. They are focused on growth, so expect another acquisition soon. This is likely going to be a large company. I don't see very many red flags, although they do have high debt at $243 million.

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McEwen Mining

MUX

Gold Producer

$1.88

342M

$642M

McEwen Mining is a mid-tier gold and silver producer. In 2017, they will produce 100,000 oz. of gold and 3 million oz. of silver and (150,000 oz. of gold equivalent). By 2020, they should be producing somewhere around 200,000 oz. gold equivalent (including silver). That's very solid growth, which is their strategy. They have large resources with 10 million oz. of gold and 200 million oz. of silver. Their only red flags are high costs and $50 million in debt. They have been losing money, with all-in costs for gold equivalent around $1,300 per oz. (free cash flow).

They have significant exploration potential on their six projects. It's probably not wise to bet against Rob McEwen, who built Gold Corp from its beginning. Their El Gallo property (500,000 acres in Mexico) has 9 gold discoveries, 1 producing mine, and 2 others under development. That property alone is probably worth their market cap.

They also have several other excellent properties. They recently bought the Black Fox property (1.2 million oz. at 5 gpt) from Primero Gold at a fire sale price. Gold Bar in Nevada is currently being built to produce 65,000 oz. (production scheduled for 2019). The Los Azules property is a large copper project with 20 billion lbs. of copper and a $2.4 billion capex. I would expect them to sell this project to fund growth of their gold and silver projects. San Jose is a long-life gold/silver mine that is producing 90,000 oz. of gold equivalent.

I think McEwen Mining has big upside potential in the long term at higher gold prices. If their share price drops any lower, it will be very attractive. They have Rob McEwen as CEO. He is one of brightest in the business, and takes a salary of $1 per year. He is one of the most shareholder focused CEOs.

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Pan American Silver

PAAS

Silver Producer

$14.97

154M

$2300M

Pan American Silver is one of the best silver producers. They plan to increase silver production from 25 million oz. to 30 million oz. As long as silver prices do not drop, they are going to be a cash flow machine. Cash costs in 2018 were around $2.50 per oz. I would estimate all-in costs (free cash flow) around $10 per oz. (net of by-product) for 2019. They have $250 million in cash and no debt. They are extremely leveraged for higher silver prices with such a good balance sheet. They will be able to grow and pay a high dividend.

Amazingly, they are still cheap, selling at $2.31 per oz. for future reserves. There are really no red flags with this stock. They do have mines in Bolivia and Argentina, which creates location risk. They could lose production from their Bolivian mine (15% of production) if it were to be nationalized, but they can make up for that from their 5 development projects. Also, I expect them to buy a few projects with their cash flow. Plus, they have 5 million oz. of gold resources, producing 150,000 oz. annually, which they are using to reduce their cash costs.

If silver mining stocks come into favor for investors, this stock could do really well. It's trading at $14.97 today, but reaching $100 would not be that big of a surprise. Pan American, First Majestic, Endeavour Silver, and Hecla Mining are all basically the same: strong companies that are likely to have high upside potential. At its current valuation, Pan American might be the best bet from a risk/reward standpoint.

Long term at $100 silver, you could get 30 million oz. x $75 per oz. free cash flow = $2 billion in cash flow. If they get valued at 10x cash flow, that will make them a potential $20 billion market cap at $100 silver. The FD market cap is currently $2.3 billion. The stock bottomed in January 2016 at $5.63.

Note: They are currently trying to acquire Tahoe Resources for $1 billion. This will make them an even strong company. Tahoe has 22 million oz. of gold resources, plus the massive Escobal mine in Guatemala. Escobal has had a legal issue and may not resume production at 20 million oz. of annual production, but the Guatemalan supreme court ruled in their favor in 2017. The odds look good that the mine will resume production.

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SSR Mining

SSRM

Gold Producer

$12.35

124M

$1531M

SSR Mining (previously Silver Standard Resources) has become mostly a gold mining company. They purchased the Marigold mine in 2013 from Barrick Gold in Nevada. This was a good deal for SSRM. This will give them 200,000 oz. of gold production for 15 years. It's a 5 million oz. deposit, although only 75% recovery rate. All-in costs are around $1,100 per oz. Long term, it should be a cash flow machine at higher gold prices.

With their success with Marigold, they decided to buy another low-cost gold mine. They acquired Claude Resources (excellent location in Canada) in 2016. This added 100,000 oz. of gold production at cash costs around $600 per oz. Seabee is a 2 million oz. deposit, but will likely grow in size.

Until recently, they had 1 billion oz. of silver resources. Then, they sold their Diablillos project to Abraplata Resources, which had 72 million oz. of silver (100 gpt) and 650,000 oz. of gold (.9 gpt) for $14 million. That is about 15 cents per oz. of silver equivalent. Then, they sold their Candelaria project (120 million oz.) in Nevada to Silver One. They seem to have zero confidence in silver prices rising. Both Diablillos and Candalaria are $1 billion projects at higher silver prices.

Then, they ran into water issues at their large Pitarrilla silver project in Mexico. It has 650 million oz. of silver resources and 9 million oz. of gold, but it looks like all they will mine is about 25 million oz. underground. They do have one silver mine in Argentina. They recently acquired their Chinchillas project (100 million oz.) that began production in 2018 at 5 million oz. per year.

They don't have much of a pipeline, but they will probably buy another gold project soon with their strong balance sheet of net $200 million in cash. They are a mid-tier producer, but they tend to act more like a major and are very conservative. They will likely grow into a major. The question is how big of a major will they become? I have my doubts they will reach a new high in their share price, which was $43 in 2007, but they will probably come close.

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Teranga Gold

TGCDF

Gold Producer

$3.04

113M

$343M

Teranga Gold is a mid-tier producer in West Africa. Their Sabodala project in Senegal is a large (4.4 million oz.) open pit project. Cash costs are projected to be around $650 per oz. in 2018, with all-in costs around $1,000 per oz. They are currently building their second mine (Wahgnion), which is a 2.4 million oz open pit project with low cash costs. Their production should increase over of the next few years from 230,000 oz. in 2018 to 350,000 oz. in 2020.

Sabodala and Wahgnion give them two long-life, low-cost projects to build on. I expect them to find at least a third mine and maybe more. They have two early exploration projects in Burkina Faso: Golden Hill and Gourma. Both have a lot of drill targets on large land areas and another potential mine. Plus, they have 4 projects in Cote D'Ivoire with significant potential.

Currently, their FD market cap is $353 million, so they are not very cheap. The key for them is going to be production growth beyond 350,000 oz. If gold prices rise, they should have enough cash flow to acquire another company. The only red flag for them is the locations of their mines in West Africa.

Conclusion

Which stocks on this list would I buy first? Or, how would I rank them? That's probably a question you have. Here is my ranking from a risk/reward standpoint. But that ranking can change very quickly and is quite arbitrary.

All of these stocks have similar upside potential based on future cash flow potential versus their current market cap. It's almost impossible to predict which management teams are going to execute the best. For this reason, I just own all of them and let it balance out. I keep my cost basis low for each stock that I own. I try to never have 3% of my cost-basis allocated to a single stock, and prefer to keep it at 1% or lower. For the stocks on this list, which I consider quality stocks, I am comfortable with 1% to 2% allocation.

  1. IAMGOLD Corp.
  2. Pan American Silver
  3. Coeur Mining
  4. McEwen Mining
  5. First Majestic Silver
  6. Hecla Mining
  7. Endeavour Silver
  8. Argonaut Gold
  9. SSR Mining
  10. Eldorado Gold
  11. Teranga Gold
  12. Leagold Mining
  13. Equinox Gold
  14. Gran Colombia Gold
  15. Alio Gold

Disclosure: I am/we are long AG, ALO, ARNGF, CDE, EDO, EXK, HL, IAG, LMCNF, MUX, PAAS, SSRM, EQXFF, TGCDF, TPRFF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.