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Gold Miner Stocks: What’s Driving Long-Term Production Growth?


Nov. 20 2020, Updated 12:16 p.m. ET

Long-term production growth

After years of cutting back on sustained capital expenditures, gold miners have started to refocus on production growth as gold prices (GLD) remain buoyant in 2016. Sustained growth is one of the prerequisites for sustainable outperformance over the long term.

While Agnico-Eagle Mines’s (AEM) already had a strong pipeline—probably one of the best growth pipelines in its projects—it recently provided an exploration update along with an updated resource estimate for its Amaruq project.

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According to the latest update, Amaruq’s mineral resources rose 13%, taking its total resources to 3.7 million ounces at a grade of 6.0 grams per ton. Given the strong exploration results at Amaruq to date, there could be further potential upside to the deposit. AEM expects to provide a full update of resource estimates with year-end results in February 2017.

Brownfield expansions

Iamgold (IAG) is looking at brownfield expansions at its Rosebel mine in Suriname and Essakane mine in Burkina Faso. In addition, Westwood is ramping up. It’s one of the most important assets for the company.

For more information about this project, please read IAMGOLD is Riding High on Its Upbeat 3Q16 Earnings IAMGOLD is on track to install a secondary crusher in 4Q16, with further optimization expected in 2017. This move should help the Rosebel site keep its production rate steady as the proportion of hard rock rises. During 3Q16, IAG acquired the Saramacca property near Rosebel. IAG’s CEO, Stephen Letwin, said during the company’s 3Q16 earnings call that this property could become a significant source of soft rock for Rosebel, helping it to increase production and lower costs going forward.

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Growth opportunities

Eldorado Gold (EGO) provided an update on its growth and exploration projects during its investor day on September 7, 2016. The market seemed to be happy with the Eldorado’s suggested growth profile.

The company now has most of the permits in hand, and it’s restarting its development plans at Skouries and Olympias, which are high-quality projects. In 3Q16, the company also acquired an exploration license for its Bolcana porphyry project in Romania. It has already started drilling in this area. EGO also has a 100%-owned Brazilian development project, Tocantinzinho, which is pending board approval and could come online in 2019. With these projects, Eldorado’s production could potentially double by 2020 while its unit costs reduce.

New Gold (NGD) offers a strong production growth potential. In 1H16, New Gold completed ~60% of its planned 2016 exploration program. Rainy River is the most important project for the company right now. At its full capacity, the project is expected to produce as much as all of New Gold’s other mines right now.


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