Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
When it comes to reasons to be bullish on a potential bull market in precious metals, Bank of America (NYSE:BAC) said this week that it expects a total of 152 rate cuts from global central banks this year. In addition to potentially loose monetary policy, geopolitical tensions are also a factor in favour of precious metals, coupled with the fact that de-dollarization has triggered global central banks to continue actively buying gold.
Given this, undervalued precious metals stocks are expected to deliver healthy total returns over the next 12 months, and the following three precious metals stocks with valuations waiting to be repaired and expected to lead the rally are worth buying.
Kinross Gold (NYSE:KGC) shares are up 27% over the past 12 months. Despite this, the gold miner still has a forward P/E ratio of 14 times and looks undervalued. Undervalued because Kinross expects gold production to remain stable through 2025. Once gold prices hit another record high in 2024, this will translate into revenue and cash flow growth for the gold producer.
Kinross had a liquidity buffer of $2 billion as of the third quarter of 2023, according to the earnings report. Operating cash flow visibility is more than $1.6 billion per year, based on the third quarter’s operating cash flow. As a result, the company has a high degree of financial flexibility to pursue acquisition-driven growth. Once production visibility changes, KGC stock will likely skyrocket. Additionally, KGC stock pays a 2% dividend yield, and dividends are expected to grow at a healthy rate this year.
Newmont Newmont Corporation (NYSE:NEM) is likely the most undervalued precious metals stock right now. With shares down 28% over the past 12 months, this should be a once-in-a-lifetime buying opportunity. This blue-chip stock offers an attractive dividend yield of 4.25% and has a high-quality asset base with clear cash flows.
Newmont has an investment-grade balance sheet that creates opportunities for organic and acquisition-driven growth. Last November, the company completed the acquisition of Newcrest Mining, creating a world-leading gold company with strong copper production capacity. Another point worth pointing out is that Newmont generated $1 billion in operating cash flow in the third quarter of 2023. Annual operating cash flow potential could exceed $5 billion as realised gold prices rise and more acquisition deals are completed, all of which will translate into positive investments and healthy dividend growth.
Hecla Mining (NYSE:HL) is an undervalued, low-priced precious metals stock that is the largest silver miner in the U.S. and also dabbles in gold assets. The company is reporting silver production of 14.3 million ounces in 2023, roughly the same as a year ago. That should be one reason for Hecla’s depressed share price. But in fact, the reason for the stagnant production growth is the suspension of operations at the company’s Lucky Friday mine.
And in recent news, the Lucky Friday mine has resumed production and is expected to start up in the first quarter of 2024. Additionally, the Keno Hill mine, with production of 1.5 million ounces of silver in 2023, is likely to be the main source of production growth this year. By 2025, Hecla aims to produce 20 million ounces of silver per year. Thus, there is plenty of upside to production. If silver prices rise this year, revenue growth for the company is also expected. Considering these positive factors, expect Hecla Mining’s shares to rally strongly this year.
