Experts Pick Their Top 5 Gold Miners for 2024

Gold prices have jumped 13% this year.

While you can own gold futures, or hoard bullion in your home, most investors choose to buy shares of gold miners.

With so many to choose from, we turned to financial pros to see which ones they were watching.

At the top of the list was Newmont Mining (NEM).

This was rather odd, considering the stock is only up 1.25% in 2024.

Yet, this could be a catch-up play for the back half. 

Here’s why.

Newmont Mining’s Business

Newmont is one of the biggest gold mining companies in the world.

It one of the only gold miners the prestigious S&P 500 and Fortune 500 listings. 

At its core, Newmont explores for, develops, and produces gold along with copper, silver, zinc, and lead deposits around the world. 

It has active mines across the Americas as well as in Australia, Africa, and other regions. 

Source: Newmont Q2 2024 Investor Presentation

An interesting tidbit – Newmont is consistently ranked as one of the most sustainable and responsible mining companies out there.

Now, let’s break down Newmont’s business segments:

• Gold (60% of revenues) – This is Newmont’s bread and butter – producing and selling gold from major mines in Nevada, Australia, Ghana, Mexico, Argentina, Canada and elsewhere.
• Copper (20% of revenues) – Copper production, mainly from mines in North/South America and Australia, makes up a big chunk of Newmont’s pie.
• Other Metals (20% of revenues) – The remaining revenues come from by-product metals like silver, lead and zinc from their gold/copper operations.

In their latest quarterly results, Newmont saw higher revenues thanks to increased gold and copper sales volumes. 

However, profits took a hit from elevated operating costs despite higher gold prices. 

Newmont has an ambitious growth pipeline fueled by major projects and expansions at existing operations. Key near-term drivers include the Tanami Expansion 2 and Ahafo North projects extending output in Australia and Ghana, respectively, as well as the Cadia expansion in Australia boosting copper and gold volumes.

Longer-dated growth options span the Yanacocha Sulfides deposit in Peru and massive Wafi-Golpu in Papua New Guinea. Funded by robust cash flows, this pipeline positions Newmont to maintain and potentially increase its global gold and copper leadership for decades. Investors can expect a steady stream of project milestones ahead.

Financials

Source: Stock Analysis

Like most gold miners, Newmont lives and dies by the price of gold and input costs.

Lately, it’s seen both volume and price increase. Yet, higher mining costs have kept margins compressed where other miners have seen them expand.

Cash flows have improved as well, though they are far below their peak in 2020 and 2021. Additionally, Capex has idoubled as the company builds out its new mines.

At the same time, total debt expanded moderately.

Valuation

Source: Seeking Alpha

Newmont and Barrick Gold (GOLD) have both underperformed the broader gold miner index.

Yet, both carry higher P/E ratios while Newmont’s price-to-cash flow is fairly high.

Smaller miners like Coeur Mining (CDE) have seen their stocks soar as its volume increased substantially. Yet, its price-to-cash flow ratio isn’t significantly higher than Newmont or Barrick.

And with all holding similar forward enterprise value to sales ratios, we can assume markets expect some catch up from the laggards.

Growth

Source: Seeking Alpha

Intrestingly, none of the miners exhibit substantial growth.

While 2023 was a good year, it wasn’t blockbuster.

But, as we can see on the EBITDA line, Coeur shined on profitable growth because new production came online.

Profitability

Source: Seeking Alpha

The story bears out on the profitability lines as we see Newmont and Barrick both deliver higher gross and EBITDA margins.

If Newmont hadn’t had the non-cash expense, it would see its other margins in line with Barrick.

Our Opinion 3/10

We’re not overly impressed with the performance of Newmont or gold miners.

Generally, miners act as leveraged plays on the price of gold. That’s not the case today.

Whether it’s higher operating costs or a changing business environment, we can’t say for sure.

Nonetheless, we’d prefer to steer clear of gold miners for the time being.

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