Most of 2016 has been very kind to precious metals miners. The resurgence in gold and silver prices have provided some much-needed support for an industry that was mired in a devastating three-year slump. This downturn was not limited to the precious metals, as commodities in general had taken a beating amid a highly deflationary global market.
Despite a hiccup in this year's turnaround for the miners, there are several small-cap precious metals producers who are seeing strong output from their mines already this year.
Take, for instance, Harmony Gold Mining (HMY), which has a modest share price that typically hovers under $4 per share. The company operates mines in both South Africa and Papua New Guinea, both countries known for their vast natural resources. Harmony is not quite a small-cap company, however, with a market capitalization of $1.6 billion. (Small-cap stocks are usually defined as less than $1 billion in market cap.)
In the fiscal year 2015, Harmony was the third-largest gold producer in South Africa with 1.08 million ounces of gold output. This also placed HMY a solid 12th in the world in terms of gold production. It also boasts mineral reserves totaling 42.6 million oz and provable resources that are above 110 million oz.
After increasing its overall production each of the last three quarters, Harmony is now even exceeding its own annual guidance thus far in 2016. It expects to ramp up its gold output to 1.1 million oz by the end of this year. Not surprisingly, shares of HMY are up an incredible 280% year-to-date.
On the silver side of the things, Coeur Mining (CDE) is worth a look. Even though CDE is the largest primary silver producer based in the United States (as well as a significant gold producer), it fits within the small-cap definition with about $835 million in market cap. Its share price is a bit higher, in the $5.50 per share range.
Impressively, CDE share prices have climbed 122% so far this year. In addition to its operations in the U.S., Coeur also has mines in South America and Australia. According to its corporate website, "The company produces around 18 million ounces of silver and more than 226,400 ounces of gold annually.” This translates into nearly 560 metric tonnes of silver and more than 7 tonnes of gold.
Beyond maintaining a strong production profile in both gold and silver, Coeur has also gotten leaner and more efficient: last year, its all-in sustaining costs per ounce of silver produced fell by 22%, year-on-year.
Overall, fortunes are swinging back in the right direction for a variety of mining companies, especially those who aren't so large that they became burdened with debt during the commodities boom of 2009 to 2011. You can find even more information on Profit Confidential regarding mining stocks that could emerge as "two-baggers" in 2016—meaning their share prices double, or increase by 100%, over the course of the year.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.