| Negative Free Cash Flow Isn’t That Bad for Some Gold Miners | |
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Intermediate Gold Miners Fell in 2015, What Lies Ahead? (Continued from Prior Part) Free cash flow
The ability to generate free cash flow is key in a weaker gold price environment. While miners’ ability to generate FCF (free cash flow) comes under more and more pressure, they reduce costs and capital expenditure. In this part of our series, we’ll see the gold miners that can generate cash in this market environment.
Ability to generate FCF
AngloGold Ashanti’s (AU) free cash flow for 3Q15 was $3 million after one-offs as compared to $30 million in 3Q14. The company remains focused on FCF generation by reducing costs and operational improvements. Though, the challenges in South Africa might not let the costs come down to the extent necessary for it to generate significant cash flow. On the other hand, further currency weakness could be one of the significant tailwinds for the company.
Sibanye Gold (SBGL) generates positive FCF that supports its above-average distribution paying ability.
Gold Fields (GFI) has been positioning the business to focus on generating FCF. While a fall in costs and operating efficiencies are driving FCFs, its troubled South Deep mine has been a drag on the company’s cash flows for some time. This is due to the mine’s costs, as they’re higher than average.
Negative FCF isn’t all that bad
Eldorado Gold (EGO) is generating negative FCF mainly because of high capital spending on development projects, unlike most of its peers (GDX). For the first nine months of 2015, the company generated negative FCF to the tune of $78 million. Going forward, the completion of growth capex is expected to see Eldorado generate positive FCF given stable gold prices.
New Gold (NGD) has also been generating negative FCFs mainly on the back of its elevated capex profile due to the development of New Afton earlier and now the Rainy River project. The company is expected to continue generating negative FCFs going forward a few years as capex on Rainy River unwinds.
Investors can get exposure to gold by investing directly in gold miners’ stocks or by investing in gold-backed ETFs like the Market Vectors Gold Miners ETF (GDX). AngloGold and Gold Fields account for 7.4% of GDX’s portfolio holdings.
Continue to Next Part Browse this series on Market Realist:
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Gold Fields ltd
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PRODUCTEUR |
CODE : GFI |
ISIN : US38059T1060 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Gold Fields est une société de production minière d'or basée en Afrique Du Sud. Gold Fields est productrice d'or, de cuivre au Ghana, au Perou, en Australie et en Afrique Du Sud, en développement de projets d'or au Mali, et détient divers projets d'exploration au Perou. Ses principaux projets en production sont ST IVES MINE et AGNEW en Australie, BEATRIX MINE, DRIEFONTEIN, KLOOF MINE, SOUTH DEEP, KLOOF et BEATRIX en Afrique Du Sud, DAMANG, TARKWA et DAMANG PROJECT au Ghana et CERRO CORONA au Perou, son principal projet en développement est KOMANA au Mali et ses principaux projets en exploration sont LOBO aux Philippines et CHUCAPACA et CANAHUIRE au Perou. Gold Fields est cotée aux Etats-Unis D'Amerique, en Afrique Du Sud et en France. Sa capitalisation boursière aujourd'hui est 11,7 milliards US$ (10,5 milliards €). La valeur de son action a atteint son plus bas niveau récent le 10 novembre 2000 à 1,69 US$, et son plus haut niveau récent le 13 septembre 2024 à 14,21 US$. Gold Fields possède 821 530 048 actions en circulation. |