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Agnico Eagle Mines Limited (AEM $223.70)
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Equinox Gold Corp. (EQX $17.08)
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Aris Mining Corporation (ARIS $16.03)
Q: Like many of your subscribers, I am enjoying the current run up in gold. I have positions in EQX, AEM and ARIS. My question is what happens when/if the run abates or the price of gold sags, for whatever reason. Which of the gold companies, including the above, are best suited to survive in a lower gold price environment, and why? Many thanks
5i Research Answer:
Like with any industry, the survivors will be those with diverse operations, low costs and good balance sheets. Larger companies such as FNV and AEM have an advantage here, certainly. ARIS is much smaller, and has some debt, but cash flow is solid. It should be OK. EQX is $12B, and debt is about 3X cash flow. But, still highly profitable with cash flow. We would not expect financial issues with these. That being said, these and other stocks would certainly take a big hit in a gold reversal. Sentiment can shift quickly, and lots of investors with big gains would be very quick to exit.