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LAWRIE WILLIAMS: World Top 20 Gold Mining Companies – some major changes and better dividend potential

We return again to London specialist precious metals consultancy, Metals Focus’ latest annual Gold Focus publication analysing global gold supply and demand and extracting from it its latest estimate of the world’s largest gold producing companies by output.  As can be seen from the table below, seven of the top 20 of these have their headquarters in North America (five in Canada and two in the U.S.), four are based in Russia or former Soviet republics, and a similar number have their roots in South Africa, three in Australia and the remaining two in China.

As can be seen there have been some very substantial changes from the 2020 positions, mostly having been brought about by various mergers, acquisitions and consolidations, and we have seen some of these continue into the current year.  Most notable so far this year has been Gold Fields’ agreed acquisition of Yamana, which should catapult it into becoming the world’s third largest gold miner as well as a major silver producer, and Kinross’ divestment of its Russian assets to Highland Gold, which could knock it back five places in the world’s top gold producer hierarchy.

There will also have been some serious production shortfalls at specific mining operations in 2020 due to closures and cutbacks because of Covid-related restrictions and stoppages.  These mostly have fallen away by 2021 with output in most cases returning to near normal.  Probably the biggest non-merger or Covid-related change in output was the 16.2 tonne gold production gain at Freeport-McMoran’s Grasberg operation in Indonesia.  Although this is primarily a copper mine, its size and high gold grades make it one of the world’s largest gold producers too, and here the transition to underground mining of ore with far higher gold grades led to the massive increase in gold output, which will likely be even higher in 2022.

Table:  World’s 20 largest gold producers 2021 by gold output (tonnes)

Company

Domicile

2021 output

2020 output

Change

Newmont

USA

185.7

183.7

+1%

Barrick

Canada

138.0

148.1

-7%

Polyus Gold

Russia

84.5

86.0

-2%

Navoi MMC

Uzbekistan

82.5

79.7

+4%

Anglogold Ashanti

South Africa

76.9

94.8

-19%

Gold Fields

South Africa

71.4

69.2

+3%

Agnico Eagle

Canada

64.9

54.0

+20%

Kinross

Canada

62.2

71.8

-13%

Newcrest

Australia

58.7

66.8

-12%

Northern Star

Australia

49.1

30.6

+61%

Harmony

South Africa

48.8

39.6

+23%

Endeavour Mining

Australia

47.8

28.2

+69%

Zijin

China

47.5

40.5

+17%

Kirkland Lake

Canada

44.6

42.6

+5%

Polymetal

Russia

44.2

43.6

+1%

Freeport McMoran

USA

43.0

26.7

+61%

China Gold Group

China

35.7

37.9

-6%

Sibanye Stillwater

South Africa

34.7

31.6

+10%

B2Gold

Canada

32.6

32.4

+1%

Nordgold

Russia

31.9

32.5

-2%

Source:  Metals Focus, Sharps Pixley.

One thing potential gold investors should be aware of is that at current gold prices all the major gold miners are making strong profits as all-in costs nearly all remain well  below the gold price level and margins are high.  Most have been raising dividends too.  Also the Russian headquartered miners have seen their stock prices decimated on Western exchanges, although their profitabilities should still remain strong assuming they can sell their product – and there’s always a market for refined gold bullion.

Meanwhile the improved profitabilities of the Western- based gold mining companies has been enabling them to substantially increase their dividend payments over the past couple of years.  Given the general low interest rate environment prevailing elsewhere this should have further improved their attractiveness to existing, and potential, stockholders. 

Notably those from smaller gold producers who may have become used to higher dividend yields in the past, but found them diminished if their holdings had disappeared into the maws of bigger companies by the acquisition process, may have felt somewhat aggrieved.  Think Randgold here as an example.  Its shareholders had been used to far higher dividend yields than their Barrick counterparts, and since the acquisition of the former by the latter in something of a reverse management takeover, the enlarged Barrick has raised its dividend yield very substantially.  Certainly it seems that Barrick’s new CEO, Mark Bristow, who was formerly CEO of the smaller company, has set his sights on improving shareholder monetary participation.  Other major miners seem to have been playing catch-up accordingly.  Perhaps the major gold stocks deserve a better rating by the markets than they have been receiving?

21 Jun 2022 | Categories: Gold, Silver, China, Russia, US, Mining

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