Since the commodities downturn started four years ago, gold companies have sought ways to reduce costs and push ahead. The spot gold price ended 2015 at US$1,061 per oz., down 10% for the year and 36% since closing 2012 at US$1,664 per oz. Despite the challenging gold-price environment last year, more than a few companies registered share-price gains.
The Golden five
Claude Resources (TSX: CRJ; US-OTC: CLGRF) topped the percentage gainers, rising 148% last year to finish at 78¢. The stock is up an astonishing 457% since exiting 2013 at 14¢. Claude’s flagship asset is the Seabee gold operation, located in northeastern Saskatchewan. The operation includes the Seabee mine and the nearby Santoy mine complex, which includes the Santoy Gap and Santoy 8 deposits.
In an interview, president and CEO Brian Skanderbeg notes Claude’s success has come from improving its free cash flow margin with stronger grades and better mining techniques.
Two years ago Claude started using Alimak long-hole mining at Seabee, improving productivity and lowering costs. It also produced from the higher-grade Santoy Gap deposit. (Full production from the Santoy Gap should start in 2017.) With these changes, and an asset and royalty sale in 2014, Claude has improved its free cash flow position and balance sheet.
Skanderbeg expects the company exited 2015 with more than $35 million in cash, up from $11 million from the start of the year.
In 2016, the miner will deliver strong operational results, generate free cash flow and repay its debt, while stepping up its exploration efforts. “Operating execution, balance sheet and exploration will be the themes for the year for Claude,” Skanderbeg says.
Endeavour Mining (TSX: EDV; US-OTC: EDVMF) exited 2015 at $7.63 per share, up 79.5% for the year, and 58% in the past two years. Doug Reddy, Endeavour’s senior vice-president of business development, attributes the share price appreciation to several events, including strong quarterly production results, voluntary debt repayments totalling US$40 million and “excellent” exploration results from the Agbaou gold mine in Côte d’Ivoire.
In December, Agbaou recouped its total construction capital and historic costs of US$181 million — 22 months after starting commercial production.
In November, Endeavour completed a 10-for-one share consolidation after La Mancha Resources, a private investment firm, bought a 30% interest in the company. In return, Endeavour received US$63 million in cash and a 55% stake in its fifth gold mine — Ity in Côte d’Ivoire — as well as a package of exploration properties and future financing support.
Endeavour expects to produce 580,000 oz. annually from its five mines in West Africa. Excluding Ity, it anticipates reaching the high end of its 2015 production forecast of 475,000 to 500,000 oz., with all-in sustaining costs of under US$930 per oz. This quarter, the miner should make a development decision on its Houndé gold project in Burkina Faso.
Integra Gold (TSXV: ICG; US-OTC: ICGQF) ended last year at 34¢ per share, up 74% from the end of 2014. Its shares gained 89% since exiting 2013 at 19.5¢.
During 2015, the junior drilled over 90,000 metres on its Lamaque gold project in Val-d’Or, Que., began building the Triangle zone portal and launched a $1-million “gold rush” challenge to help find discoveries by releasing historic data on the past-producing Lamaque property. “[Last year] was the busiest year we’ve ever had,” Steve de Jong, the company’s president and CEO, said in an emailed response.
In November, Integra published a better-than-expected resource update for its Triangle zone deposit, by incorporating 27,815 metres of new drilling. It still has assays from 35,000 metres pending. The deposit — one of the several at Lamaque — now contains a global gold resource of 1.49 million oz. at a cut-off of 3 grams gold.
Investors can expect another busy year in 2016, “with 100,000 metres of drilling planned, an updated preliminary economic assessment and an updated resource estimate, as we push Lamaque forward,” De Jong says. He adds that there is a “niche” for “high-grade, safe-jurisdiction, advanced-stage projects.”
Integra will unveil the winners of its Gold Rush Challenge at the Prospectors & Developers Association of Canada convention in March.
Detour Gold (TSX: DGC; US-OTC: DRGDF) rose 52% during 2015 to finish at $14.41 per share. The intermediate gold producer is up a remarkable 251% from its 2013 close of $4.10 per share.
In 2015, Detour ramped up its flagship Detour Lake gold complex in Ontario to design capacity, repaid US$124 million in short-term debt and reported positive infill drill results from its 30,000-metre program at Lower Detour.
“The share price success of Detour Gold in 2015 is the combined result of operational momentum, with the midpoint of our guidance at 500,000 oz. gold and financial discipline applied to the balance sheet,” Paul Martin, Detour’s president and CEO, said in an emailed response. Detour has guided 2015 production of 475,000 to 525,000 oz. gold, at all-in sustaining costs of US$1,050 to US$1,150 per oz.
Klondex Mines (TSX: KDX; NYSE-MKT: KLDX) shares gained 45% to end last year at $2.83. The stock is up 76% from its 2013 close. The junior producer operates the underground Fire Creek and Midas gold-silver mines in Nevada. It started producing from Fire Creek in the second half of 2013, and from the Midas mine and mill in early 2014. The company has reached steady production at Midas, and it is ramping up Fire Creek. In a December interview, John Seaberg, the company’s vice-president of investor relations, attributed the company’s share price performance to its execution abilities. “We run our mines as a business — which is what everyone should do — that generates free cash flow in almost any gold-price environment,” Seaberg said. On Dec. 17, the company agreed to buy the bankrupt Rice Lake gold-mining complex in Manitoba for US$32 million. The transaction should close in early 2016. Klondex says its focus will remain on its Nevada assets and filling its Midas mill.
Kirkland Lake Gold (TSX: KGI; US-OTC: KGILF) ended the year at $4.84, up 44.5% since the end of 2014, and 88% since exiting 2013. The company has been operating the Macassa gold mine in Ontario. On Nov. 16, it announced a US$178-million, all-share takeover of St Andrew Goldfields to become an intermediate gold producer.
Lake Shore Gold (TSX: LSG; NYSE-MKT: LSG) rose 44% to finish 2015 at $1.12 per share. The stock has climbed 131% since the end of 2013. Over the past two years, Lake Shore has increased production and lowered costs at its Timmins West and Bell Creek gold mines in Ontario, after expanding its Bell Creek mill. It recently acquired Temex Resources.
Premier Gold Mines (TSX: PG; US-OTC: PIRGF) shares climbed 40% to close last year at $2.64. The stock has appreciated 76% over the past two years. Premier has five gold assets. In 2016, it intends to produce at its 40%-held South Arturo mine in Nevada with partner Barrick Gold (TSX: ABX; NYSE: ABX), and finish a feasibility study on the partly owned Hardrock deposit in Ontario, with partner Centerra Gold (TSX: CG; US-OTC: CAGDF).
OceanaGold (TSX: OGC; ASX: OGC) exited last year at $2.64 per share. The stock increased 31% since 2014 and 61% since 2013. In 2015, it bought the Waihi gold mine in New Zealand and acquired Romarco Minerals for the Haile gold mine in South Carolina
Roxgold (TSXV: ROG; US-OTC: ROGFF) shares advanced 27% in 2015 to finish at 70¢. The stock has increased 57% in the past two years. The company is building the Yaramoko gold project in Burkina Faso, with commissioning on track for the second quarter of 2016.
Agnico Eagle Mines (TSX: AEM; NYSE: AEM) is the only senior gold producer that registered significant share price gains last year. It finished at $36.37 per share, up 26% since 2014 and 30% since 2013. The miner — like all of the companies listed, except for Klondex — is still trading below its 2012 close.