Gold Miners: Focus On Organic Growth And Clean Balance Sheets - Ian Ball
(Kitco News)- While investor interest in the mining sector remainslackluster, one mining-sector CEO said that is not what companies should focuson; instead, they should continue concentrating on organic growth and improvingtheir balance sheet.
Ian Ball, CEO of Abitibi Royalties, said that although themining sector faces fierce competition for investor dollars from marijuanastocks and cryptocurrencies, he is confident that capital will return ifcompanies continue to show value.
“The market has gone flat; it is kind of boring, but I don’tthink it is a bad time to be in the mining sector,” he said in a telephoneinterview with Kitco News.
Ball’s comments come as gold futures have managed to bounceoff four-week lows but continue to trading near the lower end of its tradingrange. Junegold futures last traded at $1,320.10 an once, up 0.54% on the day.
Meanwhile the VanEck Vectors Gold Miners ETF(NYSE: GDX)also remains range bound, last trading at 22.98 a share.
Despite a “flat” marketplace, Ball said that there are stillopportunities in the sector. In particular, he said he likes what Yamana Gold(NYSE: AUY,TSX: YRI)has does in the last few years improving their production while managing theirbalance sheet. Abitibi Royalties is invested in Yamana, which operates CanadianMalartic mine with a 50/50 partnership with Agnico Eagle (NYSE: AEM,TSX: AEM).
“I think Yamana is a good example of what the mining sectorneeds to do. In the last few years they sold off noncore assets to clean uptheir balance sheet and have been focused on their organic growthopportunities,” he said. “You can’t control the market, but you can controlyour execution.”
But its more than just one company, Ball said that he seesthe sector as whole taking their balance sheet and cash flows more seriously,which will attract investor attention eventually.
“I am seeing the most discipline in the mining sector withinthe last 20 years,” he said.
Along with looking at companies with solid growth prospectsand a clean balance sheet with positive cash flow, Ball said that his firmcontinues to see a lot of potential in Canadian projects. He added that Canadagold market is seeing its best average gold prices as the currency continues toweaken against the U.S. dollar.
In particular, Ball said that Abitibi Royalties is excitedabout the growth potential from their royalty agreements with the Malarticmine, he added that his firm will start to receive some capital from the minein the fourth quarter and exportation on other royalty properties, EastMalarctic and Odyssey, are moving full steam ahead.
“East Malartic is the newest discovery, and ithas come out of know that is showing great potential,” he said. “Those twoproperties have gone from having no ounces two years ago to now having fourmillion ounces. The development of East Malartic and Odyssey is working outexactly the way we expected it.”
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.