Looking at the final numbers for 2015, the top ten gold producers in the world were the same ones that topped the list in 2014. Total output rose marginally in 2015, but it was a rising tide that did not lift all boats. Some of the Top Ten saw output drop as high-expense mines were shut down, and production at older mines declined. Others had new projects begin operations, boosting the bottom line.
Due to obvious difficulties in obtaining numbers, these charts do not include state-owned enterprises or privately held companies.
With all the changes in production levels, surprisingly there were only two companies who changed position from 2014. Agnico Eagle Mines (AEM,) which was #10 in 2014, swapped places with Sibanye Gold, which was #9 the same year.
Cost cutting and streamlining put these miners in good position to benefit from gold’s big rally in the first quarter of 2016. As you can see in the chart below, gold mining stocks have seen a huge turnaround from multi-year lows in the last three months. Sibanye (SBGL,) whose total holdings amount to three aging gold mines in South Africa, has gotten a double dip of good news. Not only is the price of gold going up, the South African rand has seen some really serious depreciation. The effects can see seen in their stock price.
Some miners are using the jump in stock prices to make secondary offerings, using the proceeds to pay down debt. (Polyus (PGILF) delisted itself from the London Stock Exchange in December, and is now listed on the Moscow Stock Exchange.)
But stock prices can’t be supported by hopes and dreams (at least, not for long,) so it comes down to making sure cash is flowing in, not out. In the case of the gold miners, that means keeping all-in sustaining costs (AISC) below golds spot price. Since these are the top ten gold producers in the world, we’d expect them to be the best at cutting expenses and lowering production costs.
Here is a comparison of AISC for 2014 and 2015. As expected, everyone found a way to reduce overhead. The only outlier is Kinross (KGC,) who stayed steady at a $975/oz AISC.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product