I'm a big fan of RealVision and a mining engineer with his own consultancy firm that specializes in technical & financial feasibility work for mining industry projects. I'm also a fan of the principle that you should never buy a single mining stock if your intent is to gain commodity exposure (and the leverage that comes with investing in gold miners rather than the metal itself). Remember that "a gold miner is a liar standing next to a hole in the ground" (Mark Twain quote?) & never forget there are 101 ways to skew reserve/resource estimates in your favor when it comes to something for which the grade is non-uniform and the quality is measured as a couple of grams per 1000 kg of ore.
Instead, I would create a portfolio based on your willingness to take on risk that comprises of about 30 gold mining companies. I created such a portfolio mid March 2020 (a little soon) and got out (a little early) at the start of June 2020. The portfolio I created in March also took into account valuations at the time, country risk (I focused on my favorite gold mining jurisdictions and those that might not shut down for COVID) and currency risk (to offset risk I believed my home currency, the Euro, may be subject to whilst diversifying risks in the currencies I invested in). The portfolio I created in March consisted of:
- Gold mining majors (40%). For exposure to gold and to offset the risk of smaller companies and exploration juniors. In order of preference, I selected: Evolution Mining, Kirkland Lake Gold, Newmont Gold, Polyus Gold, Polymetal, Newcrest, Barrick, and Kinross. I sold Kinross and Newcrest early because I didn't like its exposure to Mauretania and Papua New Guinea, respectively, based on developments at the time.
- Mid-tier miners with ability to grow autonomously or by M&A (15%). In order of preference, I selected: Northern Star Gold, Regis Resources, Saracen Mining (now merged with Northern Star), Highland Gold (now privatized)
- Operational mining juniors with ability to grow autonomously or those that are takeover targets (15%): Victoria Gold, Gold Road Resources, Fiore Gold, TMAC Resources (now acquired by Agnico Eagle), and Hummingbird Resources. I sold Hummingbird Resources early because I didn't like its exposure to Mali based on developments at the time.
- Juniors close to production (15%): These companies can experience a significant re-rating as they move from construction to operation (when the gold price remains stable). I selected in order of preference: Pure Gold, Bluestone Resources, Erdene Resource Development, Orezone
- Junior developers (10%): "The Vault", or ounces in the ground that become much more valuable if the gold price rises significantly. I selected Sabina Gold & Silver, Skeena Resources, Wallbridge Mining, Balmoral Resources (now merged with Wallbridge), Troilus Gold, First Mining Gold, Novo Resources, International Tower Hill Mines, Bonterra Resources. I sold International Tower Hill Resources Early.
- Junior explorers (5%): High risk high reward. Cabral Gold, Benchmark Metals, Japan Gold, Radius Gold
I still like these companies, even though you should note that I selected them in a hurry (about 100 hours) as the COVID crash was occurring. Also, please note that I am no investment advisor and this is not investment advice (I am just sharing what I did and which companies I like).
As for me, after having been out of gold miner investments since the beginning of June, I am now carrying out a more comprehensive analysis of global gold mining companies. My intent is to finish before the next crash occurs or before inflation really picks up steam and gold miners adjust to reflect this (like many others I am still not certain which will occur next). This time I want to be better prepared. When I complete my analysis, I can send you the results if you are interested. Please send me a note if you would like me to do so with your email address included so that I can reach you directly.