"One of our favorite financial metrics for screening gold and precious metal mining stocks is free cash flow (FCF) yield, which we believe provides clear insight into a company's financial health and operational efficiency.
To define FCF yield, let’s first look at free cash flow. This metric represents the cash a company gets to keep after accounting for its operating expenses and capital expenditures. In other words, it's the money available for distribution to investors.
Unlike earnings or net income, free cash flow is harder to manipulate on financial statements, making it a more credible reflection of profitability.
FCF yield is calculated - by dividing the free cash flow per share by the current share price and presenting the result as a percentage. The higher the free cash flow yield, the better, as it signifies the company is generating ample cash relative to its market value.
It can also suggest that a company is undervalued, pointing to a potential buying opportunity for investors.
Furthermore, a company with a high FCF yield can afford to pay dividends, buy back stock, decrease debt or invest in future growth—all actions that can potentially boost shareholder value.
That said, let’s explore the top 10 gold and precious metal mining stocks as of July 2023, beginning with number 10.
A Snapshot of the Top 10 Precious Metal Mining Stocks
10. Impala Platinum Holdings - 6.2% FCF Yield Impala Platinum Holdings Limited, a leading platinum producer, opens our top 10 list with a decent free cash flow yield, signaling healthy finances.
9. West African Resources - 6.7% FCF Yield Operating in Burkina Faso, West Africa, this Australian mining company has a substantial free cash flow yield, signifying operational efficiency.
8. Capricorn Metals - 6.9% FCF Yield An Australian gold mining company, Capricorn Metals showcases a strong free cash flow yield, indicative of a strong financial position and high profitability.*
7. Emerald Resources - 7.8% FCF Yield Emerald Resources, an Australian exploration firm, presents a notable free cash flow yield, indicating profitability and strong cash generation capabilities.
6. Dundee Precious Metals - 9.4% FCF Yield This Canadian-based international mining company exhibits a strong free cash flow yield, reflecting a healthy financial standing.
5. Resolute Mining - 13.6% FCF Yield Resolute Mining, an Australian-African gold miner, sports a high free cash flow yield, a testament to its financial strength and efficient operations.
4. Northam Platinum Holdings - 13.6% FCF YieldOperating in South Africa, Northam Platinum is a notable platinum group metals miner. Its high free cash flow yield shows its financial robustness.
3. Silver Lake Resources - 13.7% FCF Yield Silver Lake Resources, based in Australia, presents a high free cash flow yield, reflecting its financial soundness and operational efficiency.
2. Perseus Mining - 15.3% FCF Yield Perseus Mining, a gold exploration and mining company also based in Australia, has shown an impressive free cash flow yield, indicating strong cash generation capability.
1. China Gold International Resources - 18.7% FCF Yield China Gold International Resources, headquartered in Vancouver, tops our list with the highest free cash flow yield.
As an investor, it's crucial to monitor these figures and trends, as they provide vital signs of a company's financial health and can guide decision-making in your investment journey. We always recommended considering a combination of metrics for a well-rounded view of a company's overall performance and potential."
The main point of interest here is of course that BGD has used Capricorn Metals as a blueprint for its own development strategy.
BGD are just at an earlier stage in the development curve.
Also key point of interest is the fact you can bypass the Lassonde curve or at least minimise it. (see link below).
This is the usual situation for junior miners where as a discovery is made and defined, the SP languishes at the engineering stage, as a mine is being built and funding is sought etc.
For years.
But! if you're producing using existing mine infrastructure, at the same time you're extending resources.... you're unicorn.
You're set up to be nailing it on the Free Cash Flow metrics..
In BGD's case it's an unbeatable combination when combined with the start of new breakouts in the gold price. we are building on existing mine infrastructure, extending and deepening the discoveries and enabling mixing of grades to drive greater profitability.
(With thanks to @fbx258, posting on PRU threads, I included the link in previous post, reformatted, highlighted and added comment. NOTE I am not pumping or promoting PRU, which I used to hold years ago. It has had some challenges and I'm not up to speed on it yet but useful for the analytical elements ).
(20min delay)