Gold Mining Is A Great Business Getting Even Better; Especially For Agnico Eagle And Alamos Gold
Our top two picks for big gold miners had news out on Wednesday that were their best ever. The second quarter of 2024 was a remarkable quarter for the bottom lines of Agnico Eagle and Alamos Gold.
In the case of Agnico Eagle, it was their third quarter in a row of record free cash flow. Few companies, in any industry can say the same. With gold in a powerful gold market, it is turning gold mining into a wonderful business that stacks up beautifully against any sector.
Once gold started its breakout earlier this year, I featured Agnico Eagle as my top pick when it comes to the biggest gold miners. The thesis was that the majors are always the ones to move first when the gold stocks come out of a bear market.
I’ve featured them several times since then and glad I did, they are firing on all cylinders and are the best performer when it comes to the top 3 major gold miners. During the second quarter, due to the highest average quarter for the price of gold ever, they generated over half a billion dollars of free cash flow.
The only knock I have against them is that I think they would add more shareholder value by sitting on gold instead of cash. I would love to see more gold miners sitting on part of their gold production. It is much better than holding fiat currencies, especially for protection against inflation.
If more gold miners sat on gold instead of fiat currencies they would not suffer from the constant destruction of purchasing power. It would further emphasise the soundness of gold as the best form of money. And it would help push the price of gold higher which would further enhance their bottom lines.
Surprisingly, the major gold miners don’t really do it, and this would be another feather in the cap of Agnico Eagle. They don’t need to do it because their peers aren’t, but a gold bull can hope.
With the gold bull market in its early days and their exceptional execution, they will continue to be the best performer of the top 3 gold miners.
Alamos Gold is another of our top gold miner picks that had a fantastic quarterly report out on Wednesday. Much like Agnico Eagle, Alamos Gold is also performing exceptionally well.
Both have broken out significantly since the February, 2024 lows, and while several of the gold miners are well below their all-time highs, they are both making new all-time highs and outpacing gold. While Agnico Eagle is just above its all-time high, Alamos Gold is significantly above its all-time high.
Alamos Gold is a significantly smaller gold miner than Agnico Eagle, but they also delivered impressive metrics for the second quarter of 2024. They had record free cash flow that was four times the free cash flow in the first quarter of 2024.
They received $2336 per ounce of gold during the second quarter, and reduced their all-in costs per ounce produced to $1096. Those kinds of margins are very impressive for any industry and their all-in costs are well below the average cost of production for gold miners.
While many of the gold miners are struggling to increase production and reduce costs, their President and CEO John A. McCluskey closed his quote in the news release brilliantly by mentioning, “We remain well positioned to achieve full year guidance, and deliver significant production growth, at declining costs over the next several years.”
The numbers in the quarterly report and John McCluskey’s quote sum things up perfectly to indicate how well they are doing relative to their peers and even the larger gold miners.
In Closing
Agnico Eagle and Alamos gold are the two big gold miner picks at Rocks And Stocks News. Based on their exceptional performance in their operations and in stock action, they are setting the bar high, making it so that we wouldn’t exchange them with any of their peers.
They have the key operational excellence to keep outperforming their peers. With headwinds behind them as gold continues in its powerful bull market reaching a new all-time high in the futures market this week.
The trend for gold is very friendly, as are the operational and stock performance trends for Agnico Eagle and Alamos Gold.
With leadership like that, it won’t be long before generalist investors take note, and start moving into gold stocks. It always starts at the top with best in breed before it moves down the gold stock food chain.
All the best,
Allan Barry Laboucan
Disclosure
Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. The business model of Rocks And Stocks News is to fund research and reporting on the sector, picks and sponsors through corporate sponsorship. We are thankful to sponsors for enabling commentary free of charge to readers and viewers of the reports. When reporting on sponsors it is on behalf of the sponsors discussed in the portion of the report mentioning the sponsor. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes which he discloses when discussing them in the reports.
