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Gold Miners’ Free Cash Flow Estimates in 2018 and Beyond

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Analysts’ estimates for FCF generation

Investors are typically interested in gold mining companies’ (GDX)(GDXJ) ability to generate FCF (free cash flow) because FCF helps them invest in future growth—apart from the aim of returning cash to shareholders.

Barrick Gold (ABX) is expected to generate significant free cash flow of $964.0 million for 2018. This estimate is higher than the $669.0 million in FCF that the company generated in 2017. The higher FCF generation expectation is mostly due to higher precious metal prices and lower capex.

For Newmont Mining (NEM), analysts are forecasting FCF similar to ABX. The FCF estimate for NEM is $913.0 million for 2018, which is lower than NEM’s actual FCF of $1.47 billion generated in 2017. This should again rise to $1.46 billion in 2019 as NEM’s capex requirements decline.

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Goldcorp and Kinross Gold

Goldcorp (GG) didn’t generate significantly positive FCF in 2017—mostly due to a buildup of working capital. For 2018, analysts see a positive FCF of $24.0 million, which should significantly ramp up to $982.0 million as its growth requirements are taken care of.

Analysts expect Kinross Gold (KGC) to generate FCF of -$9.0 million in 2018. This outlook is most likely due to KGC’s guidance to use the cash flow and proceeds from non-core assets to pursue development opportunities—especially the Tasiast Expansion and the Round Mountain Phase W.

Yamana Gold and Agnico Eagle Mines

While Yamana Gold (AUY) generated negative FCF in 2017, analysts are expecting positive FCF of $119.0 million in 2018. As its capital expenditure on Cerro Moro comes to an end and the mine starts production, its FCF is expected to expand going forward, increasing to $305.0 million in 2019 and $400.0 million in 2020.

Analysts expect Agnico Eagle Mines (AEM) to generate FCF of -$366.0 million in 2018, compared to FCF of -$106.0 million in 2017. Due to the company’s capital expenditure requirements needed to finance its growth projects, its FCF is expected to be negative at least until 2018.

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