People have sought after gold for millennia, as the yellow metal has played vital roles as a store of value and a foundation for sovereign coinage as well as in jewelry. Because of the constant demand for gold, gold mining has become a vast industry that spans the globe in search of new resources that can be taken out of the ground at a cheaper price than what customers will pay for them.
Gone are the days when individual prospectors would go off on gold rushes using hand tools to dig and/or pan for the yellow metal. Nowadays, gold mining companies are huge operations that take full advantage of the areas in which they can find plentiful resources of gold. Some have vast portfolios of mining assets that provide diversified exposure across the world, while others concentrate their attention on just one or two lucrative mining sites.
Image source: Getty Images.
Regardless of which strategy these companies follow, the gold mining stocks below have been hugely successful in finding and processing gold ore, and many of them also have other operations that are worth knowing about before you invest.
The 10 biggest gold mining stocks on major U.S. exchanges
4-Year Total Return
Newmont Goldcorp (NYSE: NEM)
Barrick Gold (NYSE: GOLD)
Freeport-McMoRan (NYSE: FCX)
Agnico Eagle Mines (NYSE: AEM)
Kirkland Lake Gold (NYSE: KL)
AngloGold Ashanti (NYSE: AU)
Kinross Gold (NYSE: KGC)
Gold Fields (NYSE: GFI)
Compania de Minas Buenaventura (NYSE: BVN)
Sibanye-Stillwater (NYSE: SBGL)
Source: S&P Global Market Intelligence. Returns as of July 20, 2019.
Let's take a closer look at these gold mining stocks to learn more about how they make their money and what their prospects for the coming years look like.
1. Newmont Goldcorp
Newmont Goldcorp resulted from the 2019 merger of U.S. miner Newmont Mining and Canada's Goldcorp, which Newmont bought for $10 billion. The combination brought together two already vast portfolios of gold assets that have made the company the industry's leader in terms of market capitalization. The combined company mines gold in nine different countries on four continents, with assets in Ghana, Australia, and across North and South America, and full-year production added up to about 7.4 million ounces in 2018.
As a U.S.-based company, Newmont Goldcorp is the only gold mining stock found in the S&P 500 index. Yet its operations go well beyond gold, with mining in silver as well as base metals like copper, lead, zinc, and nickel. Newmont Goldcorp also mines and produces uranium and lithium and historically has even had coal and oil and gas exposure. Nevertheless, the miner has focused increasingly on gold in recent years, and significant capital investments in existing assets, as well as major acquisitions, have both helped Newmont Goldcorp grow.
Going forward, Newmont Goldcorp will remain a powerhouse in the industry. Even before the merger, both companies were extremely cost-efficient operations, with all-in sustaining costs in the range of $800 to $900 per ounce of gold. With a good combination of producing mines and prospect areas for future development, Newmont Goldcorp expects to use its new scale to command resources to explore opportunities that most smaller companies can't afford to tackle. That bodes well for the newly merged company's prospects in the years to come.
2. Barrick Gold
Prior to Newmont Goldcorp's merger, Barrick Gold was the largest gold producer in the world, with annual production well in excess of 5 million ounces of gold. In addition and despite its name, Barrick is also the world's largest publicly traded producer of copper, producing more than 400 million pounds of the base metal each year. Nevertheless, more than 90% of Barrick's revenue comes from the yellow metal, making it one of the closest things to a pure play in gold mining that you'll find among major companies.
Image source: Barrick Gold.
Barrick has operations across the globe, but much of its exposure lies in a few key locations. The gold miner's Nevada operations are extensive, producing more than 40% of its overall gold and boasting extremely low all-in sustaining costs in the low $600s per ounce. Barrick is also part of joint ventures with Newmont Goldcorp in the Pueblo Viejo mine in the Dominican Republic as well as in the Kalgoorlie Super Pit site in Australia. Moreover, its 2019 merger with Randgold added further global exposure, and that's led the company to decentralize some of its operations to allow local managers to have more say in how Barrick develops its various mining properties.
Yet Barrick's most notable asset is one that hasn't panned out at all. The Pascua-Lama mine in South America, which spans the border between Chile and Argentina, has some of the largest gold reserves of any site in the world. However, high costs of development have stymied the company's efforts there, as have concerns among local residents about environmental risks.
Barrick's financial situation has actually led it to rein in production during a period of relatively weak prices for the yellow metal and to concentrate more on taking advantage of its most easily mined sites. Focusing on lower-cost production should help to improve cash flow, and that will be a critical element of Barrick's strategy for the foreseeable future.
Among all of the stocks on this list, Freeport-McMoRan is the one that least identifies itself as a gold mining company. Freeport is known much more for its role as a major copper producer, with its Grasberg mine in Indonesia representing one of the world's largest deposits of copper and gold. Freeport also has extensive mining operations across the Americas, including its Morenci mine in Arizona and the Cerro Verde asset in southwestern Peru, and includes molybdenum as a major production asset in addition to gold and copper.
For a long time, Freeport-McMoRan even went further, seeking to establish itself as a diversified natural resources company. In addition to its mining assets, the company took on the oil and gas industry, obtaining exploration and production assets in the Gulf of Mexico in the early 2010s. At the time, the move seemed like a good one, as gold prices were on the decline while the prospects for energy looked solid. However, when the bottom fell out of the oil market shortly thereafter, Freeport found itself facing massive losses. Eventually, Freeport decided to move on, refocusing its efforts on its mining operations.
Image source: Freeport-McMoRan.
Freeport's copper business hasn't been a big winner for the company in recent years, since the slowdown in global economic activity has moderated prices of the important base metal. As gold prices have started to perform relatively better, Freeport has looked more closely at putting the emphasis back on the precious metal. Yet given the size of its copper reserves, Freeport will have difficulty focusing its efforts on gold to nearly the same extent as any of the other companies on this list of gold mining stocks.
4. Agnico Eagle
Agnico Eagle Mines has an illustrious history in the mining industry, and its name still refers to its diversified portfolio of mining assets. The name Agnico comes from the symbols for the chemical elements silver, nickel, and cobalt, and Agnico's merger with Eagle Gold in the early 1970s gave the company its current identity and a solid mix of metals to mine and process.
Agnico Eagle currently operates eight mines in Canada, Finland, and Mexico. One of its most important assets is its 50-50 joint venture stake in the Canadian Malartic open-pit gold mine, which is Canada's largest.
Yet much of Agnico Eagle's popularity among investors comes from its near-term potential for rising production. The company has invested in assets in the Canadian Arctic territory of Nunavut, and its Meliadine and Amaruq mines are only now starting to add to total production for Agnico Eagle.
In addition, shareholders in Agnico Eagle benefit from one of the longest track records of dividend payouts in the industry. Dividends are a challenge for many gold miners, as the capital expenditures required for gold mining make it difficult for companies to have anything left over to return to shareholders. However, Agnico Eagle is proud of having been able to pay a dividend for 36 years, and CEO Sean Boyd has consistently said that the company's aim is to raise that payout over time. With attractively low all-in sustaining costs for gold production that could well go down as new assets come fully online, Agnico Eagle is in a good position to stand out just below the industry's most prominent mining companies.
5. Kirkland Lake
Kirkland Lake Gold has been a noteworthy stock in the gold mining industry recently because it's boasted some of the most impressive growth of any major player in gold. The company boasts mining assets in both its home country of Canada and in Australia, and it has ambitious production targets to generate between 950,000 and 1 million ounces of gold annually from its portfolio of mining properties.
A couple of Kirkland's projects have done especially well recently. The Fosterville mine in Australia has been the company's biggest contributor to overall production, with Kirkland seeing production soar more than 80% year over year in mid-2019. The property has actually seen reduced levels of milled ore, but the grade of the ore that's gone through Kirkland's mining and processing operations has been substantially better, helping to drive increased production. Meanwhile, production at the Macassa mine in Ontario hasn't been quite as strong, but exploration success from underground drilling in the vicinity of the current mine suggests that the asset could have even more resources to extract over the long run.
Kirkland Lake is a favorite among analysts in the gold mining stock community, and rock-bottom expectations for all-in sustaining costs that could end up below $600 per ounce give the gold miner a profit opportunity that makes its rivals green with envy. Kirkland's market capitalization is high enough to make an acquisition bid unlikely, especially given that both Newmont and Barrick have already made major moves of their own. However, consolidation could be a driver of further performance for Kirkland Lake Gold in the future.
Image source: Getty Images.
6. AngloGold Ashanti
South Africa is a major source of gold production, and AngloGold Ashanti claims the status of the third-largest gold mining company by production volume. The company has operations and mining projects on four continents, including the world's deepest mine at Mponeng in South Africa, several projects in key African nations like Tanzania and Ghana, a presence in three South American countries, and a couple of promising properties in Australia.
However, South Africa has also been a source of some difficulties in recent years, and companies like AngloGold Ashanti have had to deal with the fallout. When gold prices fell sharply in the early 2010s, it had a dramatic negative impact on the resource-dependent South African economy, leading to massive operating losses for many gold mining companies and shutdowns of their mining facilities. The resulting hit to employment has caused civil strife, and the political ramifications have included closer attention from lawmakers and government officials to ensure that mining companies don't create such large labor disruptions that they jeopardize the well-being of the general public.
It's partly because of those problems that AngloGold Ashanti has looked at the revolutionary move of considering divestment of its South African assets. With more favorable conditions elsewhere across its operational footprint, the costs of doing business in South Africa make alternatives look more attractive. AngloGold does think that its South African mines still have high economic value, but the capital investment necessary to take full advantage of them would be substantial. The gold miner seems to hope that a purchaser will be willing to make those investments while giving AngloGold additional capital to use to restructure its operations and focus on its best opportunities.
7. Kinross Gold
Toronto-based Kinross Gold is one of many gold mining stocks based in Canada, but its operations extend far beyond the borders of the Great White North. In fact, Kinross Gold's current projects don't include any Canadian sites, with exposure to the U.S., Brazil, Russia, and the West African nations of Mauritania and Ghana in addition to its exploration sites in Chile and elsewhere.
Image source: Kinross Gold.
Kinross has ambitious plans for mining success. The company expects annual production of roughly 2.5 million ounces of gold, with all-in sustaining production costs of close to $1,000 per ounce. More than half of its overall production is likely to come from its Western Hemisphere operations, with between 20% and 25% each coming from West Africa and Russia.
Recently, Kinross has enjoyed some positive developments. In the first quarter of 2019, the mining company said that its overall costs were quite a bit lower than expected, with all-in sustaining costs coming in at $925 per ounce. The company's existing projects benefited from efforts to improve the grade of ore it pulled out of the ground, as well as more efficient mill operations and higher recovery of gold with less power expenditure than projected. At the same time, Kinross is still working hard to develop its pipeline of unmined resources, with projects in Alaska seeing particular promise.
Kinross isn't the largest gold miner, but it has found impressive niches in which to operate. If gold markets cooperate, Kinross should be a prime beneficiary of improved conditions across the industry.
8. Gold Fields
Gold Fields is a South African gold mining company. It has eight operating mines scattered across the globe in Australia, Chile, Ghana, Peru, and South Africa, as well as several development projects. Gold Fields produces about 2 million ounces of gold each year, and its attributable gold reserves amount to roughly 48 million ounces. The company also has a substantial copper-producing operation, with attributable copper reserves of almost 700 million pounds.
As we saw with AngloGold above, Gold Fields has seen some pressure from its South African operations, and that's a considerable concern given that the company has about two-thirds of its gold reserves in South Africa. Yet the gold miner has enough exposure elsewhere to counterbalance some of that country-specific risk, and its stock has generally followed the price of gold fairly closely over the years.
More recently, though, Gold Fields has started to stand out from the crowd. The biggest reason has to do with the internal restructuring of its capital structure, as Gold Fields found a way in early 2019 to pay down debt that was coming due in 2020 with a combination of longer-term bond issuance and the sale of some noncore assets. Looking ahead, investors hope that Gold Fields will be able to sustain its upward trajectory and participate fully in any rally if gold prices keep climbing.
9. Compania de Minas Buenaventura
There are plenty of foreign mining ventures across the globe, but it's rare to see any of them available for U.S. investors on major stock exchanges. Compania de Minas Buenaventura is an exception, as the Peruvian precious metals producer became the first Latin American mining company to list its shares on the New York Stock Exchange back in 1996.
Buenaventura has gold exposure to six different mining properties, which combined produce an estimated 875,000 to 945,000 ounces of gold annually. Yet the Peruvian mining company produces a lot more than just gold. Five different sources of silver bring in around 23.7 million to 26.5 million ounces of the white metal annually, and Buenaventura also gets tens of thousands of metric tons of lead, zinc, and copper from its Peru-based mines.
Image source: Getty Images.
Buenaventura has worked hard to try to think long term, with what it calls its de-bottlenecking program seeking to improve infrastructure in order to optimize production volume even at the cost of temporary shutdowns to implement the program. For instance, between late 2018 and early 2019, an operational interruption at its Orcopampa mine helped the company improve the mine ventilation system and reinforce galleries to ensure safety. Yet Buenaventura has also faced challenges, such as a three-week strike at its Uchucchacua mine in January 2019.
Peru can be a tough environment for mining, but Buenaventura has sought to make the most of its opportunities there. With solid production, Buenaventura deserves its spot in the top 10.
Finally, Sibanye-Stillwater offers a unique combination of mining assets among those companies on this list. In addition to its gold production, Sibanye's 2017 acquisition of Stillwater Mining boosted its already substantial exposure to platinum group metals, which include both platinum and palladium. That diversification has proven to be especially valuable, as the price of palladium has soared nearly tenfold since the financial crisis in 2008.
After the merger, Sibanye's operations span two countries. Sibanye's legacy presence in South Africa includes both gold and platinum group metals assets, while Stillwater's mine assets in Montana are almost exclusively producers of platinum and palladium. The company also has some projects elsewhere, including northern Canada and the Andes region of South America.
For investors, the fact that Sibanye gets about 60% of its production from platinum and palladium means that the company might not seem like a pure gold stock. Sibanye would likely agree, as it gets only about a sixth of its adjusted pre-tax operating earnings from gold. Nevertheless, with the company turning around its gold operations at the same time that it puts big bets on platinum group metals, Sibanye-Stillwater is an interesting pick for gold investors.
Some other gold stocks you should know about
It's important to understand that there are many gold investments that aren't included on this list. For the most part, that's because they're not miners but rather fall into other categories. They include the following:
- Gold streaming companies like Franco-Nevada (NYSE: FNV) don't mine gold themselves but rather provide financing to companies like the ones on the above list to help them develop and operate their mines. In exchange, streaming companies get the right to buy a certain amount of the gold produced at a discounted rate.
- Some gold exchange-traded funds invest directly in gold bullion and therefore track the prevailing price of gold. Mining companies have exposure to gold prices, but operational problems can cause mining stocks to move out of step with bullion prices, and some mining companies hedge their future production in order to protect against falling prices for the yellow metal.
These companies are legitimate investments, but they're not in the mining business. If you want the success that can come from finding and exploiting vast mineral resources, then only mining stocks are likely to give you the results you want for your portfolio.
Image source: Getty Images.
All that glitters...
Investing in gold mining stocks has its pros and cons. On one hand, gold mining stocks often don't follow the ups and downs of the broader market, offering investors some extra diversification in their portfolios. They also can deliver big gains when a mining company does a good job in making the most of the mining assets it owns. On the other hand, plenty of things can go wrong with gold mining, and worst-case scenarios can threaten the very existence of even top gold miners.
These 10 top gold mining stocks, however, have stood the test of time and have solid prospects that should help them stay in business for years into the future. Few investors should put all their money into gold mining stocks, but allocating a portion of your portfolio toward gold miners can be a smart way to profit from the precious metals industry.
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