If there is one asset class that is loving the recent market volatility, it has to be the gold miners. Events like the Brexit, the economic slowdown in China and negative interest rates in Japan have had gold riding high over the last few weeks.
In fact, prices for gold are now closing in on $1350 per ounce.
And while all the miners have seen their luster return, the junior gold miners have been some of the biggest winners thus far. Exchange-traded fund the VanEck Vectors Junior Gold Miners ETF (GDXJ) is up a staggering 150%-plus so far this year.
The beauty is that more could be in store for the junior gold miners.
Serving as exploration companies, the junior miners search for new mineral deposits and are a major source of future mine supply. The juniors are critical in the early stages of a new deposit, bridging the long lag time between when a new claim is found and when it is brought into production. That fact has analysts at CIBC World Markets expecting that trend of the junior gold miners surging to continue throughout the year.
Higher gold prices are already kicking off the next wave of M&A.
For investors, that means there could still be plenty of gains again for the junior gold miners. The time to buy them is now.
Here are seven junior gold mining stocks to buy today.
Junior Gold Miners That Will Climb: Iamgold Corp (USA) (IAG)
When it comes to the junior gold miners, Iamgold Corp (USA) (IAG) has exactly what investors should be looking for.
For starters, IAG already has some pretty healthy gold production across its four mines in Canada, Mali, Suriname and Burkina Faso. Those four mines should kick out between 770,000 and 800,000 ounces of gold this year. And while its all-sustaining cash costs are a bit on the high side — at $1000 per ounce — those mines are profitable in the current price environment.
Secondly, IAG holds plenty of reserves in the ground. Its Côté Gold Project promises to be a huge source of future production for the firm.
Likewise, the gold miner has kept its exploration budget intact and has made has made three major greenfield discoveries over the last three years.
Both of these facts make it a great gold miner on its own. But they also make IAG a perfect target for a larger mining stock looking to beef up its presence. And with Iamgold spending much of the downturn reducing its debt burden and bolstering its balance sheet, that buy-out could come in the latest upswing in gold prices.
All in all, IAG is one of the best junior gold miners to buy today.
Junior Gold Miners That Will Climb: Harmony Gold Mining Co. (ADR) (HMY)
Like previous pick IAG, Harmony Gold Mining Co. (ADR) (HMY) isn’t slouch among gold miners. HMY operates nine underground mines, one open-pit mine and several surface operations across South Africa and Papua New Guinea. Last year alone, Harmony managed to produce more than a million ounces worth of gold.
And HMY has become quite golden over the last year, rising in excess of 275%.
But more could be in store for this gold miner. For one thing, HMY’s production comes almost exclusively from South Africa. Continued weakness in the South African rand has helped Harmony’s fortunes.
Also helping is the fact that HMY has one of the highest cash costs of miners in the nation. That makes it a leveraged play on rising gold prices.
With the rand still falling and gold still rising, there’s plenty of upside still available for HMY stock, and that’s before accounting for its expansion efforts or additional CAPEX/cost reduction strategies its undertaking.
And with plenty of reserves in the ground, Harmony is still a buy-out target.
Junior Gold Miners That Will Climb: McEwen Mining Inc (MUX)
Rob McEwen might not be a familiar name to investors, but among the gold miners, he’s a legend. McEwen managed to turn a small unknown junior gold miner through a series of acquisitions into the largest gold producer on the planet. That company is sector stalwart Goldcorp Inc. (USA) (GG).
And he is trying to do the same with McEwen Mining Inc (MUX).
MUX is about as junior as they come, with only two small mines that actually produce any gold. However, the firm has plenty of assets in development and several exploration projects underway. That includes some projects — like its Gold Bar Project — which are located in some of the riches gold territories in Nevada.
MUX has also been actively taking over other smaller junior miners in order to secure better claims on assets. McEwen is basically following the same playbook he used with GG. And he should be successful at MUX as well.
McEwen Mining has no debt, nor does it owe any streaming royalties on its production. And while its cash costs aren’t as cheap as GG, the current gold price leaves plenty of profits and cash flows for the firm.
When it comes to the junior gold miners, MUX should be at the top of the lists.
Junior Gold Miners That Will Climb: NovaGold Resources Inc. (USA) (NG)
For those investors looking for real entry-stage junior gold miners, NovaGold Resources Inc (NG) could be a great pick. The gold miner doesn’t actually produce any gold, but what it does have is a heck of a mine in development.
NG’s Donlin Gold project in Alaska promises to be a real boon for the gold miner. The mine has measured and indicated reserves of nearly 39 million ounces of gold. That gives it an estimated life of about 27 years and makes Donlin Gold one of the largest known undeveloped gold deposits on the planet today.
What’s more, the mine has very high ore grades for its size.
The real beauty is that NG has enough liquidity/money to get the ball rolling on Donlin.
NovaGold could seriously be sitting on a game-changer of a claim.
That is, if NG doesn’t get bought out first. This sort of mega-asset, in a friendly nation, is exactly the kind of assets/reserves that a major producer is looking for. And with gold rising, they’ll pay a premium for NG’s mine.
Ultimately, that will benefit investors.
Junior Gold Miners That Will Climb: B2Gold Corp (BTG)
Small gold miners can pack a real punch. A prime example of that is B2Gold Corp (BTG).
BTG has four producing mines that continue to operate better than expected. That’s helped the junior miner realize multiple quarters of record gold production. The continued success at its Masbate mine in the Philippines will help BTG realize annual production of 510,000 to 550,000 ounces of gold this year. Even better is that the firm estimates that its all-in sustaining costs of between $895 to $925 per ounce thanks to efficiency gains at its Masbate mine.
That’s great news considering the rising-gold-price environment.
But BTG isn’t just sitting and producing gold. The firm has gotten serious about exploration as well. The firm has several projects in development. Once these mines come online, BTG estimates that it should be able to produce around 850,000 ounces of gold.
Current profitable production plus potential future production? That’s a recipe for junior miner success. And given that recipe, there’s no reason to think that BTG stock shouldn’t continue to see gains on the back of rising gold prices.
Junior Gold Miners That Will Climb: Alamos Gold Inc (USA) (AGI)
Sometimes the juniors don’t need the major gold miners. They can do it all by themselves. Case in point Alamos Gold, Inc. (AGI).
Last year, AGI took-out mid-tier rival AuRico.
That gave Alamos control of AuRico’s top-notch Young-Davidson mine. This mine features low costs and a long reserve life. These facts have quickly moved Young-Davidson into the pole-position in AGI’s asset portfolio of three North American mines. A portfolio of mines that produces around 370,000 to 400,000 ounces of gold per year. The key is that Alamos has relatively low cash costs and features strong operating cash flows.
That’s helped it keep a strong balance sheet.
Ultimately, that strong balance sheet will allow the help the junior gold miner to reinvest in its rich portfolio of development projects/mines or hunt for other small rivals to merge with or buy-out. Rising gold prices will only help AGI on all of these fronts.
That means, that AGI doesn’t need the help of the majors. It should eventually become one on its own as its ramps up production and gold continues to rise.
Junior Gold Miners That Will Climb: Global X Gold Explorers ETF (GLDX)
Can’t decide on which of the junior gold miners to buy or don’t want to make a single stock gamble? Then a broad ETF tracking the sector is for you. You certainly can use the previously mentioned GDXJ. Another great option could be the Global X Gold Explorers ETF (GLDX).
GLDX tracks the juniors of the junior gold miners — firms that are involved in the exploration phase of gold mine development and have zero gold production to their name. That can include firms like previously mentioned NovaGold that has a mine ready to go or those that are still searching for that initial claim. The ETF tracks 22 of these exploration-styled old miners.
Performance of the ETF has been spotty at best. GLDX debuted during the height of gold-mania back in 2010. As a result, it spent much of its time dropping like a stone during the gold bust. Since its inception, it has lost 24% of its value- annually. However, over the last few months, the junior miners fund has surged. With gold beginning its ascension again, there’s no reason to think that the gains couldn’t last.
Expenses for the ETF run at 0.65%, or $65 per $10,000 invested.
As of this writing, Aaron Levitt was long GG.
