Gold prices have been trending higher since the latter part of December last year. Even after that sizable correction in late January, the precious metal has been able to resume its climb. Mining stocks and gold ETFs have benefited from this increase, but the gold price is still well off its 2011 highs and has plenty of room to run. With that in mind, here are three gold stocks that are poised for gains.
Royal Gold Inc. (RGLD, Financial)
Royal Gold recently reported its quarterly earnings and boasted of record operating cash flow. Strong production and higher gold prices boosted its revenue to $107 million, amounting to earnings per share of 43 cents, up 87% on a year-over-year basis. Its operating cash flow came in at $69.7 million, and the company was able to give dividends of $15 million, up 5% year over year.
The company also recently acquired Barrick Gold Corp.'s (ABX) Cortez mine for $70 million. This is on top of its stake in the Pueblo Viejo Stream, which is 60% owned by Barrick Gold. Negative news for one of its streaming partners, however, could keep investors cautious with this one. Note that Royal Gold also invested $175 million on the Rainy River project, which reported higher-than-expected capital expenditures of $1.24 billion. The company also has a $677 million debt balance and cash position of $83.9 million, so it may not be able to complete more acquisitions moving forward.
Newmont Mining Corp. (NEM, Financial)
Newmont Mining has consolidated gold production of approximately 5.7 million ounces and has gold reserves of around 73.7 million ounces in its roughly 20,000 square miles of aggregate land area. This puts the company in a strong position to benefit from more price gains for the precious metal, although the management shakeup could complicate matters in the near term.
The company recently appointed Nancy Buese as chief financial officer following its appointment of Andrew Woodley to lead its North America business a few months back. For now, the leadership changes are still pending tangible results, but credit rating agencies such as Moody's have affirmed the company's move to sell its Batu Hijau interest is a positive sign. The company has been making a lot of effort in trimming debt by more than $1.1 billion as well.
Atlantic Gold Corp. (TSXV:AGB, Financial)
Last but certainly not least is Atlantic Gold, a junior gold developer that has four projects in Nova Scotia, Canada. These have a combined 1.8 million ounces, and the recovery rate for these projects is around 94%. Construction was just started last year, financed through $130 million in capital expenditures. The company has $18 million in cash left. Cash costs for these projects are at $500 per ounce, less than half of gold's current price at around $1,225 per ounce. It is also worth noting the company has $65 million in debt.
According to its latest press release, Atlantic Gold continues to explore the area for more gold and is working on its central processing plant, which has the potential to connect more deposits without significantly hurting the company's financial position.
Atlantic Gold is not without its risks and trades on the over-the-counter market, so extra caution is advised since these stocks are known for wild price swings.
Disclosure: No positions in the stocks discussed.
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