Gold Mining Bull: Top News for July 2019
Gold prices (GLD) remain near six-year highs, providing a nice boost to the gold mining sector in the month of July. Most mining stocks as a whole produced solid gains this past month.
The recent rate cut by the U.S. Fed, trade wars between U.S. and China, and tensions with Iran have had a positive impact on the gold price, which remained over $1,400/oz this past month.
Other potential catalysts for higher gold prices this year (and next) include: The risk of a global recession, further rate cuts and easing from the Fed, increased central bank buying (banks added a net 126.5 tons of gold last month), and the potential for retaliation from China in response to Trump's new 10% tariffs.
While I still would not rule out a short-term pullback in gold prices because of the potential for profit-taking (prices are up $200 in the past 2-3 months), I think all signs point to higher gold prices in the future because of the above catalysts, which should bode well for gold mining stocks (GDX).
Top Gold Mining News
I've scoured gold mining newsletters, websites, and press releases to give you the top news for July 2019:
- B2Gold (BTG) and Calibre Mining (OTCPK:CXBMF) join forces: The companies have announced that Calibre will acquire B2Gold's producing El Limon and La Libertad gold mines in Nicaragua for total consideration of $100 million (cash, common shares, and a convertible debenture). Following the completion of the deal, B2Gold will own 31% of Calibre.
For 2019, these mines are estimated to produce between 150,000 and 160,000 ounces of gold. This deal enables B2Gold to focus on its core mines in Mali, Namibia, and the Philippines.
- Equinox Gold (OTCPK:EQXFF) declares commercial production at Aurizona mine: The Brazilian gold mine is back in business. For the month of June, the mine exceeded 90% average recovery and produced more than 7,000 ounces of gold.
Production should increase through Q3 and Q4, and average life-of-mine production is estimated at 136,000 ounces of gold per year.
- Yamana Gold (NYSE:AUY) releases pre-feasibility study on Agua Rica project: Following the integration plan announced between Yamana, Glencore (OTCPK:GLCNF), and Newmont Goldcorp (NYSE:NEM), Yamana has released a new technical study on the massive copper-gold project in Argentina.
The highlights include a decrease in cash costs to $1.29 per pound and all-in sustaining costs to $1.52 per pound for the first 10 years of production and a boost in its net present value to $1.935 billion. Initial capital requirements of $2.38 billion are a drawback, but the project is highly sensitive to copper prices and would likely be economical at prices above $3.00/lb.
A full feasibility study is expected in 2020.
- Guyana Goldfields (OTCPK:GUYFF) reports work stoppage at Aurora mine: The troubled miner reported a temporary work stoppage in early July due to an employee strike; as a result of the stoppage, it estimates that approximately 22,500 tonnes were not processed. Guyana also reported weak second quarter financial results in which all-in sustaining costs averaged $1,323/oz.
- Pan American (NASDAQ:PAAS) reaches resolution of Guatemalan lawsuit: The miner announced that it achieved final resolution with Guatemalan community members who filed an action in 2014 against Tahoe Resources (NYSE:TAHO), the former owner of the Escobal silver mine. Back in 2013, a former chief of security at the mine shot and injured several protestors.
- Belo Sun Mining (OTCPK:VNNHF) receives positive ruling from federal courts: The Brazilian gold development company reported on a court ruling which confirms its 2017 construction license and 2014 environmental license for the Volta Grande gold project are both valid; Belo Sun needs to complete an indigenous study to proceed.
Volta Grande carries a post-tax NPV of $665 million with just $298 million initial capital required, based on the results of a feasibility study.
- SilverCrest (NYSEMKT:SILV) receives operating permit for Las Chispas project: The company has conditional approval to construct a 3,000 (maximum capacity) tonne per day underground mine and a conventional processing facility for its Las Chispas mine.
SilverCrest expects to complete a feasibility study in H1 2020 to be followed by project financing and construction activities in H2 2020.
- Franco-Nevada (NYSE:FNV) buys oil royalties for $300 million: The gold streaming and royalty company made another move into the oil market recently, buying from Range Resources (NYSE:RRC) an overriding royalty interest on acreage in the Marcellus Shale for $300 million.
At current commodity prices, Franco-Nevada says that revenue for 2020 is expected to be approximately $25 million growing to approximately $30 million per year in five years.
Gold miners report Q2 2019 results
Earning season is here. Take a look at Q2 2019 quarterly results for a few top gold mining companies.
- Barrick Gold (NYSE:GOLD): Barrick appears to have made a strong start as a newly combined company with Randgold (OTCPK:RGORF). It reported an 8% boost in production and a 27% rise in net cash from operations, while net earnings per share increased 106% over the last quarter to $0.06.
- Yamana Gold: Count Yamana as another gold miner making gains this past quarter. Yamana reported a 7% year-over-year increase in gold output to 257,556 ounces, with all-in sustaining costs within its guidance, at $941/oz. More importantly, net free cash flow rose to $122.9 million and the company closed on the sale of its Chapada mine for $1+ billion.
- Newmont Golcorp: Newmont's second quarter results were highlighted by gold production of 1.59 million ounces, a 37% increase over the previous quarter. However, AISC rose to $1,016/oz and it produced negative free cash flow of $79 million, due to higher development capital expenditures and lower operating cash flow, according to the company. Its net debt also stands at just under $5 billion.
- Detour Gold (OTCPK:DRGDF): Detour Gold reported strong production, with high all-in sustaining costs ($1,143) in Q2. However, the Canadian gold miner still managed to produce $51.6 million in free cash flow. This is one bearish call I wish I could take back.
- Kirkland Lake Gold (NYSE:KL): My former top gold stock pick continues to excel operationally. It reported production of 214,593 ounces, 30% increase from 164,685 ounces in Q2 2018; AISC of just $638, a 16% improvement from last year; net cash from operations of $178.4 million, a 48% increase; and net earnings of $104.2 million, or $.50 per basic share, a 69% increase.
- Alacer Gold (OTCPK:ALIAF): The Turkey-based gold miner reported production of 188,853 ounces at consolidated AISC of $692/ounce, with operating cash flow of $59.8 million and net earnings of $8.2 million or $.03 per share; it also reduced its net debt by $54 million in the quarter.
Did I miss any top news? Let me know in the comments below.
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Disclosure: I am/we are long AUY, KL. 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.