Quite a bit of news has been pouring out of the mining sector over the last few weeks, and almost all of it has been bad. Well, the enduring slump for commodities is probably not over yet, but things may finally be looking up for beleaguered gold miners.
According to a Bloomberg index of gold mining companies—one that includes bellwether firms like AngloGold Ashanti (NYSE:AU; ASX:ANG; JSE:AGG) and Randgold (NASDAQ:GOLD; LON:RRS)—advanced by a whopping 17% so far this week, the best 3-day streak since 2008 for the gold mining industry. This coincides with the strongest rally for gold prices (tracing back to last Friday) since January.
Greek Operations Resume
After being stymied by Greece’s Ministry of Energy and Environment during the upheaval of the financial crisis that gripped the country during months of limbo in bailout negotiations, the gold mine in Halkidiki (northern Greece) run by Eldorado Gold (NYSE:EGO; TSX, SWX:ELD; ASX:EAU) will soon be back online. The Council of State in Greece issued an injunction that will, for the time being, delay the ruling that shut down Eldorado’s operations through its subsidiary, Hellas Gold. The Halkidiki project was originally put on hold due to concerns about the environmental consequences of the mine.
Glencore Up and Down
Glencore (LON:GLEN) has been featured almost endlessly in headlines lately; it is not only one of the world’s premier diversified miners, but has also been hit harder than perhaps any other company in their sector due to the simultaneous slump in copper and coal prices.
Remarkably, Glencore got a boost last week when share prices for Glencore rallied, recovering to close out last week exactly where they started.
In spite of the slight recovery, Bank of America is still warning that big banks must figure out what to do with their $100-billion exposure to Glencore if the company’s shares start to collapse again.
An Objective Expert Opinion
Mineweb also recently featured an independent analysts’ take on what gold mining firms might be of particular value. He based his list on the valuation measure of how much investors are paying per ounce of gold produced by each company. Although this is not necessarily the kind of measure that translates into anything tangible in real investing, it is still a useful way to consider how certain miners are performing relative to their share price.
A list of five different gold miners was provided, each with costs per ounce of production below C$1,000 per ounce (Canadian dollars), or $770/oz in USD. Among this group, Endeavour ranks by far the best in terms of cost per once produced. Due to their relatively low costs-per-ounce of output, these 5 gold mining shares might be worth a look.
Endeavour Mining (TSX:EDV; ASX:EVR)
Thompson Creek Metals (NYSE:TC; TSX:TCM)
Timmins Gold Corp. (TSX:TMM)
Kinross Gold (NYSE:KGC; TSX:K; SWX:KG)
Golden Star Resources (NYSEMKT:GSS; TSX:GSC)
The information provided herein should not be construed as investment advice. It has been adapted from outside sources for informational purposes only. Always consult a professional before making any investment decisions.