While ounces produced may be down in 2020, the margins for gold miners may be better.
A number of precious metal producers are reducing production due to government restrictions in response to COVID-19 concerns. Companies with operations in South Africa, Quebec and parts of Ontario have been told to stop operating.
One-third of NYSE-listed senior gold miners have withdrawn 2020 production guidance, according to data compiled by Kitco. (Sibanye-Stillwater, which is putting its South African mines on care and maintenance for the next 21 days, just said "…production for 2020 may differ from previous guidance.") And as more miners reckon with the impact of COVID-19, the number should rise.
Joe Mazumdar, editor and analyst at Exploration Insights, said this setback might not hurt as much as imagined. Gold seniors are cashed up due to the precious metal performing well in 2019, so the miners are in better shape to weather the downturn. Oil prices have also fallen steeply, a significant cost for miners.
"[The seniors] may produce less ounces, but I think the potential for them to generate more margin on each ounce is pretty good," said Mazumdar.
Here’s our compiled list as of March 25 on how COVID-19 has affected NYSE-listed senior gold producers. Any data points or information missing? Let us know in the comments below. Market capitalization figures as of March 25, 2020. 1. Newmont (NYSE:NEM) $38.4B market cap – On March 22, the world’s largest gold-mining company is putting four mines on “care and maintenance” and withdrawing its 2020 production guidance as a result of the COVID-19 outbreak around the world, the company announced Monday. Guidance is withdrawn. Mines representing approximately 80 percent of the company’s production outlook for 2020 continue operating in line with production targets for the year.
2. Barrick Gold (NYSE:GOLD) $33.98B – Outside of the usual announcements regarding COVID-19 precautions, Barrick has filed limited news about impacts on operations. There has been no announcements regarding outlook in public filings. On March 24, the company said it is limiting work at Ontario-based Hemlo Mine, but operations continue since Hemlo is an "essential business to the community."
3. Kirkland Lake Gold (NYSE:KL) $13.36B – On March 22 the company terminated its share purchasing program . Kirkland’s newly-acquired Detour Lake Mine "will transition to reduced operations." The company said the impact on production could not be estimated at this time.
4. Freeport-McMoran (NYSE:FCX) $10.52B – Freeport, one of the […]
