THE world’s gold mining stocks would be well positioned to weather the COVID-19 storm owing to elevated bullion prices, especially in the first quarter, said BNN Bloomberg citing a report by Canaccord Genuity.
The first quarter saw the best quarterly gold price in seven years, with the precious metal averaging $1,582 per ounce, up 21% year-on-year, said BNN Bloomberg. Gold futures for June delivery hit $1,785 per ounce on April 14 representing the highest since October 2012, it said.
“We believe that most gold producers are well positioned to weather COVID-related shutdowns with healthy free cash flow at current gold prices and strong balance sheets,” Canaccord is quoted to have said in its report. It added, however, that focus would fall on the impact to production of COVID-19 related restrictions.
Canaccord’s top picks among big producers are Kinross Gold and B2Gold Corporation, said BNN Bloomberg.
Kinross was favoured because of “improving free cash flow, a strong balance sheet, inexpensive valuation and leverage to gold”. The company is also set to finish costly removal of unwanted material at its big Tasiast mine in the northwest African nation of Mauritania.
Meanwhile, Canaccord said B2Gold, whose stock hit a record Tuesday, is one of the senior producers with the lowest all-in cost per ounce, at around $800 per ounce.
B2Gold said last week that it was on track to meet production guidance of one million to 1.05 million oz of gold for its 2020 financial year. It, however, had taken a precautionary step of drawing down on a portion of its revolving credit facility,
Assuming production guidance continued to be met, and in the absence of other unforeseen work stoppages due to COVID-19, B2Gold said it expected to “… have the option to repay the entire drawn balance of $425m under its RCF over the course of the 2020 fiscal year and finish 2020 in a strong net positive cash position”.
