5 Gold Mining Stocks to Watch as Industry Prospects Look Bright

Industry Overview - The Zacks Mining - Gold industry is expected to benefit from a 26% growth in gold prices in 2024, with gold projected to reach around $3,000 per ounce by year-end due to geopolitical tensions and central bank buying [1] - The industry comprises companies engaged in extracting gold from mines, a process that can take 10-20 years from exploration to production [3] - Gold prices surged 26$2,748.23 in October, driven by geopolitical tensions, interest rate cuts, and central bank purchases [4] Key Trends - Gold prices are expected to continue rising in 2025 due to ongoing geopolitical uncertainty and concerns over President-elect Trump's agenda, particularly regarding tariffs [4] - The industry faces challenges such as a shortage of skilled labor, rising production costs, and supply-chain issues, prompting companies to focus on cost reduction and digital innovation [5] - Depleting resources and declining supply in old mines, coupled with rising demand from sectors like energy, healthcare, and technology, are expected to create a demand-supply imbalance, further supporting gold prices [6] Industry Performance - The Mining-Gold Industry has outperformed the broader Basic Materials sector, with a 14.5% growth in stock prices over the past year, compared to a 10.4% decline in the sector [9] - The industry is currently trading at a forward 12-month EV/EBITDA of 10.03X, compared to the S&P 500's 24.69X and the Basic Materials sector's 7.63X [11][12][13] Key Companies - Gold Royalty (GROY): Delivered record revenues and positive net income in 2024, with expectations to meet 2024 guidance of 6,500-7,000 GEOs and $13-$14 million in revenues [15] - Equinox Gold (EQX): Achieved record production, revenues, and adjusted EBITDA in Q3 2024, with the Greenstone Mine expected to produce 390,000 ounces annually for the first five years [18] - Agnico Eagle Mines (AEM): Acquired O3 Mining, which includes the Marban deposit, and plans to increase production at the Detour Lake mine to 1 million ounces annually by 2030 [20] - Franco-Nevada (FNV): Signed a $500-million precious metals stream agreement with Sibanye-Stillwater, expected to provide stable GEOs from platinum, palladium, rhodium, and gold production over 20 years [23] - Kinross Gold (KGC): Commenced production at the Manh Choh project in Q3 2024, with key development projects like Great Bear and Round Mountain Phase X on track to boost production and cash flow [26] Valuation and Growth - The Zacks Mining - Gold Industry ranks 85 out of 248 industries, placing it in the top 34%, with the top 50% of Zacks-ranked industries historically outperforming the bottom 50% by more than 2 to 1 [7][8] - Over the last five years, the industry's EV/EBITDA ratio has ranged from 7.19X to 11.20X, with a median of 9.51X [14]