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LAWRIE WILLIAMS: World top 20 Gold Mining Companies 2018/2019

Following on from the estimates of gold production for the 20 largest producing nations (See: Top 20 Gold Mining Countries – Russia Now No.2) specialist analytical precious metals-focused consultancy, Metals Focus, also published a similar table of the Top 20 mining company gold producers in its annual Gold Focus publication released a week ago.  A copy of the table, together with the national locations of the companies’ head offices, is set out below.  The various companies’ gold mines are not necessarily located in the countries in which their head offices are located, although some are,  as most of these companies operate mines in multiple locations.

 Table:  World top 20 gold producing companies (tonnes)

Rank

Company

2019 Output

2018 Output

%  Change

1

Newmont Mining (USA)*

195.7

158.7

+23%

2

Barrick Gold (Canada)**

170.0

140.8

+21%

3

AngloGold Ashanti (RSA)

102.0

105.8

-4%

4.

Polyus Gold (Russia)

88.4

75.9

+16%

5.

Kinross Gold (Canada)

77.2

76.5

+1%

6.

Navoi MMC

76.0

74.0

+3%

7.

Newcrest Mining (Australia)

73.0

75.1

-2%

8.

Gold Fields (RSA)

68.3

63.3

+8%

9.

Agnico Eagle (Canada)

55.4

50.6

+10%

10.

Shandong (China)

47.8

47.7

0%

11.

Harmony (RSA)

42.9

44.1

-3%

12.

Polymetal (Russia)

41.0

37.8

+8%

13.

Zijin Mining (China)

40.8

36.1

+12%

14.

China National Gold (China)

40.3

40.4

0%

15.

Nord Gold (Russia)

32.4

28.3

+14%

16.

B2 Gold (Canada)

30.5

29.7

+3%

17.

Kirkland Lake Gold (Canada)

30.3

22.5

+35%

18.

Sibanye Stillwater (RSA)

29.9

37.5

-20%

19.

Yamana Gold (Canada)

28.0

32.1

-13%

20.

Freeport McMoran (USA)***

27.4

75.9

-64%

Source: Metals Focus, lawrieongold

*Includes production figures for Goldcorp (acquired 2019)

**Includes production figures for Randgold Resources (acquired 2019)

*** Primary copper miner

RSA = Republic of South Africa

A precious metals investor may find it worthwhile looking at these companies as for the most part they are the ‘blue chip’ gold miners which tend to offer the safest form of investment in the gold mining sector should one want to follow this route.  As we pointed out recently, gold mining stocks have of late tended to be heavily undervalued in historical terms as compared with gold bullion and if this starts correcting itself, which we think has a great chance of happening with a rising gold price, then the investment returns from investing in gold mining stocks could be significant.  And, if one sticks to the ‘blue chip’ gold mining stocks the degree of risk is sharply diminished too due to diversity of output locations.

One point which seems to have passed many potential gold stock investors by is that at a gold price of $1,600 or more most of these gold miners were already highly profitable.  With a current gold price approaching $1,800 then they should be very profitable indeed.  Some may mitigate this a little by mining lower ore grade sections of their mining leases, but this may still have a positive effect on net present value due to a corresponding increase in prospective mine life.  However, as we have noted before, not only do the ‘blue chip’ gold stocks tend to rise faster than a buoyant gold price, but they mostly also pay dividends at a better rate than most other investments, which provides even more icing on the cake.

The potential profit boost to marginal gold miners would probably be even more dramatic, but then the degree of risk increases as well.  If the higher gold price levels are not maintained, these companies could start to encounter serious cashflow problems and a share price collapse.

For the bullion investor of course, capital safety remains important and wealth protection. in the case of a major economic collapse, continues to be a key element in such an investment decision.  If the gold price continues to rise, and general equities crash, as we have been predicting for the past several months, an investment in gold will have served you extremely well.  Silver too, despite its generally lacklustre performance over the past few years, is also at least beginning to see some benefits, being dragged up by the rising gold price.  With the Gold:Silver ratio (GSR) coming down a few notches, although still at historically high levels, the silver price has seen better percentage gains than its yellow sibling, but not hugely so.  The days when silver soared on a rising gold price may well be behind us given silver’s apparently adverse re-rating by the investment community.  However it is still likely to, at the very least, keep up with rising gold in percentage terms and may still offer some leverage advantages if the GSR comes bank a few further points.

Like gold miners, the better primary silver producers may also prove to be a good investment bet – particularly given some of these, like Hecla and Coeur Mining, have also moved into gold production as well.  There are relatively few miners which classify as primary silver producers as most metal production is as a byproduct of base metal mines (silver most often occurs in conjunction with lead and zinc). If looking at silver miners it is also worth checking the jurisdictions in which they operate as these may not always be conducive to what might be considered politically and security-safe environments.

01 Jul 2020 | Categories: Gold, Silver, Mining

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