Top 10 Gold Mid-Tier Producers For 2021

Expert Gold & Silver Mining Stock Analyst
March 10, 2021

gold design

Summary

  • These are my favorite risk/reward gold mid-tier producers for 2021.
  • They each have low valuations versus their upside potential at higher gold prices.
  • They each have quality properties with long-life mines.
  • All of them have exceptional leverage to higher gold prices.

Currently, gold prices are trending down and have been doing so since August. It’s probably not the best time for me to release this article because sentiment in the gold miners is currently dead. But there are some investors who are buying this correction or preparing to buy the next dip (I have 10 stocks on my watch list).

I think that gold will find a bottom in Q2, so now is a good time to create a list of stocks to buy when the dip comes. Why Q2? Because the stock market is getting toppy and is overdue for a correction. Once this correction occurs, the risk-on trade that has been all the rage for the past year should finally end. That will flip sentiment, and gold will finally end this correction cycle and head higher.

At this time, nobody wants gold and instead prefers stocks. But this is not 2013 all over again, when gold crashed and the stock market surged. I do not expect gold to get beaten down much lower. Perhaps $1,550, but I don’t see it going much lower than that, and I would not be surprised if $1,600 holds. I expect the bottom to be somewhere between $1,600 and $1,650.

Once gold finds a bottom, I expect a big run. Actually, a huge run. This run should take us to a new ATH above $2,075. Thus, we should see $2,100, $2,200, or perhaps even $2,300 in 2021. I expect this run to begin in either Q2 or Q3.

I'm confident the risk-off trade will end because of the insanity of MMT. Currently, everyone is wearing rose-colored glasses and thinks MMT is the cat's meow. The Fed, Congress, and the U.S. Treasury can spend a trillion dollars in one week and nobody blinks. In fact, there seems to be an MMT euphoria from using a newfound economic philosophy that implies debt is a good thing.

I have to believe that this euphoria will wear off and everyone will look at our huge pile of debt and say, "uh-oh, we are screwed!" I think that realization will begin to hit in Q2. And when it does, the $150 trillion in stocks and bonds will begin moving into gold. A tiny bit at first, but then steadily more and more. 

If we do get a run in gold this year, the mid-tier producers should do extremely well. This is why I chose that category for this article. The mid-tier producers are significantly leveraged for higher gold prices. So, if we get higher gold prices, then these stocks should do well and have big returns.

Potential Risk

While I expect gold to put in a bottom and then head higher, there is always the chance that gold simply trends lower. If this occurs, then the gold miners will get pounded. We know this because investors have shown very little patience to hold their positions when gold prices drop. Thus, there is extreme volatility in this sector. As the saying goes, with big upside potential comes big downside risk.

Stocks Included

The ten stocks included in this article all have high upside potential with higher gold prices. These are not the safest, highest quality gold miners. Instead, they are companies that have a certain degree of risk that can benefit from higher gold prices. They are a bet on higher gold prices.

Americas Gold & Silver Corp

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

Americas Gold & Silver Corp

USAS

Gold

Mid-Tier Producer

$2.39

145M

$345M

Americas Gold & Silver Corp (formerly Americas Silver Corp) is a mid-tier gold/silver producer in Nevada (Relief Canyon), Mexico (San Rafael), and Idaho (Galena). Relief Canyon produces about 80,000 oz (their share after streaming). San Rafael and Galena both produce about 1 million oz. of silver (their share).

In 2019, they completed a JV with Eric Sprott, who agreed to inject $20 million into Galena for 40% ownership. This cash injection is supposed to increase production. It already has low cash costs from base metal offsets. It should produce about 2 million oz. a year (their share) after they inject more money, which is underway.

In 2019, they completed a merger with Pershing gold. It is was an all-stock merger. After the merger, Americas Silver shareholders own 64%, and Pershing Gold shareholders own 36%. This will add 80,000 oz. (their share) in annual gold production (7 to 8-year mine life). Production began in Q2 2020, with cash costs around $800 per oz. They changed their name after the merger.

They have large resources, with about 100 million oz. of silver. This should allow them to grow silver production. They plan to build their EC120 project, which has a $17 million capex to produce 2.5 million oz. of annual silver production for five years. That is a short mine life, but during that time, they should be able to develop more resources. They are developing EC120, but have not yet given guidance for when production will begin.

They don't have a great balance sheet with only $20 million in cash and about $20 million in debt. Plus, their free cash flow isn't that great. Another red flag is that they diluted severely in 2016, adding 150 million FD shares, more than 25% dilution. It's never a good sign of shareholder friendliness when you see severe dilution. In 2016, they did a 12 to 1 reverse split. That was painful.

Hopefully, all of the bad news is behind them. They lost money last quarter, but they should report free cash flow in 2021, so investors should like the stock. It's still cheap, with high upside potential. They are not loaded down with debt, so the risk/reward looks very good. They are scheduled to double silver production from 2 million oz to 4 million oz around 2022, and I don't think that is going to be their peak silver production. Their red flag is the ability to extend the mine life at Relief Canyon.

Scorecard (1 to 10, with 10 being the best)

Properties/Projects: 7.5

Costs/Grade/Economics: 6.5

People/Management: 6.5

Cash/Debt: 7

Location Risk: 7

Risk-Reward: 7.5

Upside Potential: 8

Production Growth Potential/Exploration: 8

Overall Rating: 7

Scorecard Comments

Strengths are planned growth and significant upside potential.

Weaknesses are marginal costs, which adds some risk. Also, management has been shaky and needs to execute better.

Argonaut Gold

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

Argonaut Gold

ARNGF

Gold

Mid-Tier Producer

$1.58

290M

$468M

Argonaut Gold is a mid-tier producer focused in Mexico and North America. There is a lot to like about this company. Their production is currently 250,000 oz. They have three producing mines in Mexico and another in Nevada. All-in costs (free cash flow) are around $1,200 per oz. They have three more mines to build (two in Mexico and one in Canada), and all of them are similar. This is a very smart company that purchases economic projects with solid resources, low capex, and moderate cash costs. All of their mines should produce 60,000 to 150,000 oz. at moderate cash costs (Magino should increase annual production to 200,000 oz.).

It’s surprising that a growth company that has acquired 3 companies (Pediment Exploration, Prodigy Gold, and Alio Gold) and a large project (San Agustin), and built three mines, and has very little debt. They need to build 3 more mines, so that will take some debt. The projected cash costs per oz for their next three development projects are $600, $600, and $700. Thus, they are all economic at $1,300 gold.

Their largest mine (Magino) is currently under construction in Canada. It has 4 million oz. and a $320 million capex. Most of their cash will be spent on Magino. They are developing it for production in 2023. Cero Del Gallo is a 900,000 oz (.6 gpt) open pit in Mexico. It probably needs higher gold prices to get built. San Antonio (1.7 million oz. at .8 gpt.) is currently being permitted. Anyone who analyzes gold mining stocks has to be impressed with this stock. Management has done a good job building and operating mines. They now have 13 million oz. of M&I and a nice pipeline of projects to develop. The only question to ask is how big is this company going to get? My guess is that they will continue to buy projects and build mines.

With an FD market cap of $468 million, the upside potential is still significant. My only concern is that they will get taken out by a larger company, or we get higher taxes/royalties in Mexico. My expectation is that they will grow into a major ($3 billion market cap).

Scorecard 

Properties/Projects: 8

Costs/Grade/Economics: 7.5

People/Management: 7.5

Cash/Debt: 8

Location Risk: 7

Risk-Reward: 7.5

Upside Potential: 8

Production Growth Potential/Exploration: 8

Overall Rating: 7.5

Scorecard Comments

Strengths are planned growth and significant upside potential.

Weaknesses are some location risk in Mexico. Management is not elite, but very capable.

Eldorado Gold

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

Eldorado Gold

EGO

Gold

Mid-Tier Producer

$11.16

180M

$2B

Eldorado Gold is a large mid-tier producer with a lot of reserves (17 million oz.). They have been a growth-oriented company. They have 4 operating mines, plus 3 more being developed. Production will rise from 500,000 oz. to about 700,000 oz. after these 3 mines are built. Investors did not like to hear about permitting problems at Skouries (Greece), their 5 million oz. flagship property, and their share price crashed 70% in 2018. It has bounced back after their permitting issue appears to be resolved. Skouries construction is now 50% completed.

I like their cost structure, with cash costs around $700 per oz. and all-in costs around $1,100 per oz. Plus, all of their development projects have moderate to low cash costs. They will have high cash flow and are leveraged for higher gold prices. Their balance sheet is okay, with $450 million in cash and about $500 million in debt. I expect their balance sheet to improve from their high free cash flow.

The best thing about this stock is its management team. They are excellent mine builders and operators. Plus, this is a growth story. It could end up being a good dividend-paying stock. One red flag is that two of their operating mines are in Turkey, which adds risk. Plus, two development stocks are in Greece (Skouries and Perama). But their Lamaque mine in Quebec produces 125,000 oz. and will increase to 150,000 oz. in 2022. That mine alone is worth $1 billion at higher gold prices.

Scorecard 

Properties/Projects: 8

Costs/Grade/Economics: 7.5

People/Management: 8

Cash/Debt: 6

Location Risk: 6

Risk-Reward: 7

Upside Potential: 6.5

Production Growth Potential/Exploration: 8

Overall Rating: 7

Scorecard Comments

Strengths are a strong management team, and planned growth.

Weaknesses are significant location risk in Greece, and the upside potential is somewhat constrained, plus high debt.

Great Panther Mining 

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

Great Panther Mining

GPL

Gold

Mid-Tier Producer

$0.84

386M

$307M

Great Panther Mining (formerly Great Panther Silver) is a mid-tier gold/silver producer in Mexico. They have two producing mines in Mexico that produce 90% precious metals (silver and gold) and one producing gold mine in Brazil (Tucano). They used to be mostly a silver miner, but they acquired Beadell Resources in 2018 and their large gold mine. Tucano produces 120,000 oz. (1 gpt.) of gold, with all-in costs around $1,250 (free cash flow).

They will produce about 2.5 million oz. of silver equivalent in 2021 in Mexico. They have low resources in Mexico, but have several properties with exploration potential and have been able to replace reserves. Their silver production costs in Mexico are currently high (about $18 per oz. for all-in costs), and they lost money in 2019. However, they can lower costs when they need to and have a good management team.

They recently purchased the Coricancha gold/silver mine and mill in Peru. It has about 25 million oz. of silver equivalent (including gold). They plan to resume production once silver prices rise. Production should add 2 to 3 million oz. of silver equivalent (including gold). The cost of the mine is 15% of free cash flow for 5 years at a maximum payout of $10 million.

Their pipeline is starting to improve. San Ignacio and Coricancha are both late state development. Plus, Horicon and Guadalupe Reyes are excellent exploration projects. This could give them 4 or 5 producing mines in the future. Also, Tucano is 50,000 acres, with a lot of exploration targets.

I've read some negative comments about issues at Tucano and their high costs in Mexico. However, they have a pretty good balance sheet with about $20 million in net cash. They seem to be pretty solid. They will get slammed by lower gold/silver prices, but so will many of the producers.

Scorecard 

Properties/Projects: 7

Costs/Grade/Economics: 6.5

People/Management: 7.5

Cash/Debt: 6

Location Risk: 6.5

Risk-Reward: 7

Upside Potential: 7.5

Production Growth Potential/Exploration: 6.5

Overall Rating: 7

Scorecard Comments

Strengths are a strong management team, and high upside potential.

Weaknesses are significant location risk, high debt, and limited growth potential.

IAMGold Corp.

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

IAMGold Corp

IAG

Gold

Mid-Tier Producer

$3.07

480M

$1.4B

IAMGold Corp is a large mid-tier producer, with production at 750,000 oz. They have 4 operating mines in Suriname (northern South America), Canada (Quebec), Mali, and Burkina Faso. They are currently building a large gold mine in Ontario (Cote with 7 million oz.) and are spending millions on exploration and advancing properties. I consider this a growth stock. Their cash costs are currently about $900 per oz. (forecasted to go down), with all-in costs (free cash flow) around $1,300 per oz. That gives them around $200 million in free cash flow at $1,500 gold.

They also have two additional development stocks in West Africa. Boto (Senegal) is 1.5 million oz. at 1.8 gpt. and Sribanye (Mali) is 1 million oz. at 1.7 gpt. Plus, they have a few more exploration plays that could become mines. They are giving guidance to reach 1.2 million oz. of production in 2022, with all-in costs (free cash flow) of $1,100 per oz. These numbers seem optimistic. I'm expecting 1 million oz. at $1,200 per oz.

Their balance sheet is okay with $864 million in cash and $404 million in debt. With an FD market cap of $1.7 billion, this stock is undervalued. It’s a good income investment for future dividends. In fact, this stock has high upside potential in the long term at higher gold prices. They were valued at $23 a share in 2011. I expect them to be a high-flyer again.

Their only red flag is the location of some of their producing mines in West Africa (Mali and Burkina Faso). While both of these countries are safe today, they do have long-term political risk. You could consider their debt a red flag, but as long as they do not add any more debt, their balance sheet is pretty strong for the size of the company. Plus, with their cash flow, they should clean up their debt.

Scorecard 

Properties/Projects: 8

Costs/Grade/Economics: 7

People/Management: 8

Cash/Debt: 6

Location Risk: 6

Risk-Reward: 7

Upside Potential: 7

Production Growth Potential/Exploration: 8

Overall Rating: 7.5

Scorecard Comments

Strengths are a strong management team, quality properties, and planned growth.

Weaknesses are significant location risk, and high debt.

K92 Mining

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

K92 Mining

KNTNF

Gold

Mid-Term Producer

$4.70

231M

$1.1B

K92 Mining is a mid-tier gold producer in Papua New Guinea. They have one of the best gold mines in the world. It is high-grade and large (5 million oz. at 10 gpt.). The head grade is currently 17 gpt. Plus, they have 10 drills turning and are finding more high-grade gold.

Management has done an excellent job expanding production. They only have $8 million in debt and 231 million FD shares. Plus, they claim to be expanding production organically. Clearly, they are shareholder focused.

They are currently producing 140,000 oz. and are on schedule to increase that to 300,000 oz. by 2023. My guess is they will easily reach 400,000 oz. of production. Cash costs are projected to drop below $500 per oz. in 2023. They will be a cash flow machine.

It’s a large property (100,000 acres), with a lot of drill targets. Currently, they are excited about Kora South, Judd, and Karempe, which they are drilling aggressively. The CEO thinks they could find 8 million oz. This is really an exploration play at this valuation for big returns. They need to double their resources for this stock to do well from their current valuation. Although, it's not a stretch to value them at 15x free cash flow. If they reach 400,000 oz. and are valued at 15x, that is an easy 3 bagger at $2,500 gold.

Note: In 2019, the PNG government increased the royalty on a property to 40% for a large Newcrest Mining / Harmony Gold project. If this is applied to all mines in PNG, then K92 will get impacted. This increases the risk of holding this stock.

Scorecard 

Properties/Projects: 8

Costs/Grade/Economics: 8

People/Management: 7.5

Cash/Debt: 7

Location Risk: 6

Risk-Reward: 7

Upside Potential: 6.5

Production Growth Potential/Exploration: 8

Overall Rating: 7

Scorecard Comments

Strengths are low costs, and planned growth.

Weaknesses are significant location risk, and a bit pricey.

Pure Gold Mining

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (1/7/2020)

Pure Gold Mining

LRTNF

Gold

Mid-Tier Producer

$1.46

445M

$650M

Pure Gold Mining has an excellent gold project in Red Lake, Ontario. It is a large property on 12,000 acres and high grade. It is a 2.5 million oz. deposit at 8 gpt. Everything about this project looks good. That is probably why Eric Sprott owns 10% of the shares, and Rob McEwen owns 5%. Plus, Mark O'Dea is a director and started the company. It has a permitted 500 tpd mill. Plus, they have exploration targets all over their property, so their resources should grow in size. It's in an ideal location. The capex is low at about $75 million. Cash costs are low, below $700 per oz. And the after-tax IRR is about 35% at $1,300 gold.

Production is scheduled to ramp up in 2021, and their FD market cap has exploded. Part of the reason for the run-up is from 3 recent discoveries that will expand production. This looks like a 4 million oz. property.

They have about $65 million in cash and $48 million in debt. The only red flags are the high share dilution, and it is no longer cheap. To be a 3 bagger, they will probably need exploration success to grow production. Some investors might not like their gold streaming deal, but they can opt-out next June for $27 million, which I expect them to do. Another concern is the possibility that they might sell, but the high number of insiders should prevent that from happening. On a positive note, I expect them to grow via an acquisition. That's what mid-tier producers usually do.

Scorecard 

Properties/Projects: 7.5

Costs/Grade/Economics: 7

People/Management: 7

Cash/Debt: 7

Location Risk: 9

Risk-Reward: 7

Upside Potential: 6

Production Growth Potential/Exploration: 7.5

Overall Rating: 6.5

Scorecard Comments

Strengths are exploration potential, location.

Weaknesses are limited upside potential and an unproven management team.

Roxgold Inc.

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (1/7/2020)

Roxgold Inc.

ROGFF

Gold

Mid-Tier Producer

$1.12

381M

$426M

Roxgold Inc. is a mid-tier producer in Burkina Faso. Yaramoko is a million oz deposit with an avg grade around 10 to 12 gpt. Production will be around 125,000 oz. in 2021, with cash costs at $600 per oz. It has a 10-year mine life, but has already been producing for 4 years. They need exploration success to extend the mine life, but recent drill results have been impressive.

The high grade and low cash costs have pushed up the stock’s valuation. Thus, it is not cheap based on their current resources. They have a good balance sheet with $56 million in cash and $37 million in debt.

They are building their second mine (Seguela) in Cote d’Ivoire. The capex is $142 million to produce about 140,000 oz annually. It’s not a large resource with about 800,000 oz., but has exploration potential. Production begins in 2022. This will increase their production by over 200,000 oz, but can they maintain it?

Investors like this stock for three reasons: the high grade, low cash costs, and exploration potential. They have 120,000 acres in Burkina Faso, which is a significant gold mining country. They have a good pipeline with discoveries at Bissa South and Bissa West, and several additional targets.

They have large landholdings (750,000 acres) also in Cote d’Ivoire for exploration. The key for Roxgold is finding more gold and showing that they can get above 200,000 oz. of annual production and maintaining it. But even at 200,000 oz., the upside is somewhat limited. They will need to increase production for big returns.

Scorecard 

Properties/Projects: 7.5

Costs/Grade/Economics: 7.5

People/Management: 7

Cash/Debt: 7

Location Risk: 6

Risk-Reward: 7

Upside Potential: 6.5

Production Growth Potential/Exploration: 7.5

Overall Rating: 7

Scorecard Comments

Strengths are low costs, exploration potential, and production growth potential.

Weaknesses are location risk and limited upside potential.

St Barbara Ltd

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

St Barbara Ltd

STBMF

Gold

Mid-Tier Producer

$1.48

707M

$1.1B

St Barbara is a mid-tier gold producer based in Australia. They have three producing mines. Leonora in Australia at 175,000 oz., Simberi in Papua New Guinea at 110,000 oz., and Touquoy in Canada (100,000 oz.). Cash costs for the last quarter were about $700 per oz., with all-in costs around $1,100 per oz. Costs have increased since acquiring Atlantic Gold in 2019, but not significantly.

Investors have liked their execution, sending the stock from 20 cents in 2015 to $1.50 today. The FD market cap has exploded from $88 million to $1.1 billion. They have significant exploration potential and will spend $25 million on exploration in 2021. Their only red flags are high debt at $220 million, high share dilution at 700 million shares, and it is no longer cheap. However, with their cash flow, I expect them to grow. It might be a good income stock as gold prices rise.

Now that they have shown a strategy of growth via acquisitions, they could be a growth company. Also, if they triple in value, the dividend will be very good at today's entry price. Another strength is their management team, which is very good.

Scorecard 

Properties/Projects: 7.5

Costs/Grade/Economics: 7

People/Management: 8

Cash/Debt: 6.5

Location Risk: 7

Risk-Reward: 7

Upside Potential: 6.5

Production Growth Potential/Exploration: 7

Overall Rating: 7

Scorecard Comments

Strengths are strong management, moderate costs, and production growth potential.

Weaknesses are high debt, and limited upside potential.

Victoria Gold

Stock Name

Symbol (US)

Type

Category

Share Price (US)

FD Shares

FD Mkt Cap (3/4/2021)

Victoria Gold

VITFF

Gold

Mid-Tier Producer

$9.32

64M

$600M

Victoria Gold is a mid-tier producer in Canada. Their Eagle Gold project began production in 2019. It is a 5 million oz. resource (.7 gpt.) the Yukon. It is has a 72% recovery rate, so the actual resource is about 3.5 million oz., which is still large. It is a large property (150,000 acres) with a lot of exploration potential. They already have a second discovery at Nugget (124 meters at 3.5 gpt.).

The $285 million capex was financed using $175 million of debt and by diluting shares using equity financing. All-in costs (free cash flow) are projected to be around $1,000 per oz. With 200,000 oz. of production, free cash flow could be more than $100 million annually. I have them projected to have $138 million in free cash flow at $1950 gold.

Their FD market cap has exploded from $37 million to $955 million in the past five years. The valuation is now a bit pricey. A takeover is still possible, although they won't take a low-ball offer because four investors own 60%, and the CEO has a substantial amount of shares. I would think it will take a premium of at least 30%.

They will likely have exploration success to expand their resources. They have already found three other nearby discoveries (Olive, Shamrock, and Nugget). I expect them to find more gold and become a 300,000 oz. producer.

A recent company presentation said that they were an attractive takeout candidate. That statement seems to be laying the groundwork for accepting a low takeover premium. That concerns me because they are currently highly undervalued (valued at 5x free cash flow) and ripe for a takeover attempt.

Scorecard 

Properties/Projects: 7.5

Costs/Grade/Economics: 7.5

People/Management: 6.5

Cash/Debt: 6.5

Location Risk: 9

Risk-Reward: 7

Upside Potential: 7

Production Growth Potential/Exploration: 7

Overall Rating: 7

Scorecard Comments

Strengths are excellent location, low costs, and production growth potential.

Weaknesses are high debt, and an unproven management team.

Conclusion

These are my top 10 mid-tier producers for 2021. I can't say they will all perform well, but hopefully, most of them will. The key will be the gold price and how management teams execute. Hopefully, gold will remain above $1,700 and trend higher in 2021. Once we get above $2,000, the gold miners should be flying and producing significant free cash flow. This particular group should be part of the high-flyers because of their quality and leverage to higher gold prices.

Disclosure: I am/we are long ARNGF, USAS, EGO, IAG, KNTNF, LRTNF, ROGFF, STBMF, VITFF, GPL.

Don Durrett

Don is an expert gold and silver mining stock analyst, author, and founder/owner of GoldStockData.com – a website for gold and silver mining stock data. He is the author of How to Invest in Gold and Silver: A Complete Guide with a Focus on Mining Stocks. He is a contributing analyst on SeekingAlpha.com and a frequent guest on internet financial podcasts.


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