The price of gold has risen around 8% over the past six months as conditions have turned conducive for the yellow metal. Growing gold demand and constrained supply, along with macroeconomic uncertainty, has been a tailwind for the precious metal of late.
More importantly, it is expected that gold prices could rise to as much as $1,400 an ounce by the end of the year, according to Commerzbank. That’s significantly higher than the average realized price witnessed by most of the gold mining companies last year. This is why now is a good time to take a closer look at some names in the gold mining industry that are capable of delivering solid upside.
Eldorado Gold
Eldorado Gold [stock_market_widget type="inline" template="generic" color="default" assets="ELD" markup="(TSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has hit the ground running in 2019 as the stock has appreciated nearly 50% in value so far. That’s not surprising as Eldorado Gold’s improving production profile has given investor confidence a shot in the arm. With production expected to rise further this year, it won’t be surprising to see Eldorado shares rise further.
Eldorado’s 2018 gold production came in at 349,147 ounces, which was well above the higher end of the company’s own guidance range. The company forecasts production of 390,000 ounces to 420,000 ounces of gold this year, which translates into a 16% increase in the output at the mid-point of the guidance range.
The improved production at Eldorado will be driven by the beginning of the commercial production at the Lamaque mine. Also, the resumption of operations at the Kisladag mine will boost the company’s output to a range between 520,000 and 550,000 ounces next year. More importantly, this increase in Eldorado’s output will be achieved at a lower cost profile.
The company forecasts all-in sustaining costs between $867 and $967 per ounce through 2021, which is lower than the 2018 AISC of $994 at the mid-point. In all, Eldorado Gold’s improved production and lower cost profile make it a solid bet for investors looking to take advantage of rising gold prices.
SSR Mining
Just like Eldorado, SSR Mining [stock_market_widget type="inline" template="generic" color="default" assets="SSRM" markup="(TSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] it won’t be surprising to see it sustain the momentum this year. The company produced 345,000 ounces of gold equivalent last year. Though that was lower when compared to the 2017 output of 370,000 ounces, investors will be excited to see what lies ahead.
SSR forecasts production of 400,000 gold equivalent ounces this year as it plans to ramp up output across all three mining operations. Production from the company’s new Chinchillas mine will also aid SSR’s production growth.
But what’s really exciting to see is that the company expects its production to keep rising going forward and hit 440,000 gold equivalent ounces in 2021. SSR’s consistent production growth will be driven by an improvement in the company’s output from the Marigold mine, which is expected to clock an annual production growth rate of 30% through 2021.
As previously mentioned, gold prices are expected to remain strong this year due to several factors. This would be a big tailwind for SSR Mining as it recorded an average realized price of $1,261 an ounce last year. For comparison, gold prices have hovered around $1,300 an ounce this year. If gold keeps rising, the company will witness a major turnaround in its financial fortunes in 2019 thanks to higher production.
As such, SSR Mining could turn out to be another good bet for investors looking to bet on rising gold prices.
Pretium Resources
Pretium Resources [stock_market_widget type="inline" template="generic" color="default" assets="PVG" markup="(NYSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] is a junior gold mining company that’s growing at a tremendous pace. Its 2018 output shot up to 376,012 ounces as compared to 152,484 ounces the year before. This massive growth at Pretium is driven by a rise in the company’s recoveries and grades.
Last year, Pretium recorded a head grade of 11.9 grams per ton of gold as compared to 9.4 g/t in 2017, which was accompanied with an increase in recoveries to 97.3% from 96.2% the year before. This year, the company believes it can produce somewhere between 390,000 to 420,000 ounces of gold.
Now, that’s not as great as compared to what Pretium delivered last year. But investors should note that the company is focused on securing long-term growth so it will be making some changes in the mine plan to ramp up its output. As a result, investors shouldn’t worry much about its slower growth rate this year, as Pretium can still deliver solid growth thanks to higher gold pricing.
The company’s average realized price of gold stood at $1,231 an ounce, so there’s a lot of upside potential if we consider the recent uptick in gold prices and the forecast going forward.
Conclusion
The increase in gold prices presents a solid opportunity for mining industry investors to mint money. The three companies listed in this piece present three such opportunities as they are on track to increase production going forward, which will allow them to take advantage of an uptick in gold pricing and help investors make money.
