Which Gold Miners are Primed for a Re-Rating?

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Interview with Sean Roosen, Founder & CEO of Osisko Development Corp, and Oliver Turner, Executive VP of Karora Resources Inc.
Recording date: 30th April 2024
Gold Miners: A Compelling Opportunity
The gold mining sector presents a compelling investment opportunity currently, based on the perspectives of two highly successful mining executives - Sean Roosen of Osisko Group and Oliver Turner of Karora Resources.
The key argument for gold miners is the disconnect between the strong performance of the gold price and the lagging response of gold mining equities. With the gold price at high levels, gold miners are poised to generate significant free cash flow. However, this improvement in fundamentals has not yet been reflected in the share prices of gold mining companies.
Roosen and Turner believe this disconnect provides an attractive entry point for investors. They expect the upcoming quarters to demonstrate the cash flow growth potential of the sector as high gold prices flow through to the bottom line. As this fundamental improvement becomes more apparent, they see the potential for generalist investors to return to the sector and drive a positive re-rating of gold mining equities.
To capitalize on this opportunity, they advise investors to focus on miners with high-quality assets and proven management teams. Roosen stresses that "it starts with the quality of your project. If you don't have a good asset, the cost of capital is not going to be there for you." Turner similarly emphasizes the importance of acquiring assets that have true operational synergies.
Another key element is backing management teams with a track record of value creation. Roosen uses the analogy "you need a good jockey. A fast horse is not enough", to illustrate the point that the best assets still require the right team to deliver shareholder returns. Turner points to the strong returns his team previously generated at Klondex Mines, Karora and new lithium spin-out Kali Metals as evidence of this principle.
Importantly though, both emphasize the need to take a long-term, multi-year view to allow the investment thesis to fully play out. Part of this means being willing to go against market sentiment to acquire fundamentally attractive assets during downturns when valuations are more compelling. Roosen and Turner have successfully applied this approach with Canadian Malartic, Beta Hunt, and Higginsville.
At a macro level, the outlook for gold appears constructive. Increasing central bank purchases, the prospect of a Fed pivot, and constrained global supply growth are all seen as supportive of a strong gold price going forward. When combined with the margin expansion and free cash flow growth a high gold price enables, the stage appears set for a significant re-rating of gold equities as this fundamental improvement becomes more apparent.
In summary, the combination of an attractive macro backdrop for gold, robust underlying fundamentals that have not yet been reflected in valuations, and the proven ability of companies like Osisko Group and Karora Resources to create value from these conditions makes gold miners a compelling opportunity currently for investors with a multi-year time horizon.
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Пікірлер: 10

@torceridaho Ай бұрын

these interviews and discussions are top notch.. Thanks

@GenkiSugiru Ай бұрын

Thank you, Matt, for consistently producing informative content with many excellent guests. Sean is quite a seasoned mining exec with many successes. I've been long OR and KRR for years. I'm still not totally sold on the KRR merger. Maybe I'll warm up to it over time if I see the vision coming to fruition.