These Top 5 Gold Penny Stocks Could Be Setting Up to Soar in 2017
Here’s the thing: the decline in gold prices over the last few years has taken a massive toll on gold stocks. Many well-known gold companies are trading below the $10.00 level. I am calling these companies “gold penny stocks.”
Below, I have identified five gold penny stocks that could provide investors with massive gains in 2017.
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To pick out these five gold penny stocks, I have used three criteria: these companies have their primary properties located in gold mining-friendly locations; they produce, and their costs of production are lower than the spot gold price; and they have cash on hand to continue investing in their operations.
1. Richmont Mines Inc. (NYSE:RIC)
Richmont Mines Inc. is a gold penny stock trading at $9.25, and it has market capitalization of just $579.05 million. It’s an emerging gold producer, and it’s really good at what it does.
Headquartered in Rouyn-Noranda, Quebec, Canada, Richmont Mines is involved in mining, exploration, and development of gold properties.With a focus in Canada, the company has several producing mines, and number of exploration and development projects.
In 2017, Richmont Mines expects to produce gold in the range of 110,000-120,000 ounces. This would mean an increase of 15% over 2016 production figures.
Its production costs? The company expects to produce an ounce of gold at all-in sustaining costs of between $905.00 and $950.00. (Source: “Richmont Announces 2017 Guidance with Island Gold Mine Positioned for Another Record Year,” Richmont Mines Inc., February 2, 2017.)
5 Top Gold Penny Stock to Watch in 2017
| Company | Stock Price | Market Cap |
| Richmont Mines Inc. (NYSE:RIC) | $9.25 | $579.05 million |
| McEwen Mining Inc (NYSE:MUX) | $3.95 | $1.19 billion |
| IAMGOLD Corp (NYSE:IAG) | $4.68 | $2.13 billion |
| Klondex Mines Ltd (NYSEMKT:KLDX) | $5.10 | $759.51 million |
| Yamana Gold Inc. (NYSE:AUY) | $3.30 | $3.19 billion |
The company’s financial results for the entire year of 2016 aren’t out yet, but at the end of the third quarter, the company had $78.55 million in cash, and total current assets amounted to $98.28 million. Its current liabilities were just $31.18 million. (Source: “Richmont Mines Inc. Report To Shareholders Q3 2016,” Richmont Mines Inc., November 10, 2016.)
As gold prices increase—and if Richmont Mines continues to produce more and lower its costs—the company’s profitability could soar. As result, RIC stock could show stellar returns.
2. McEwen Mining Inc (NYSE:MUX)
McEwen Mining Inc, as I see it, is a “superstar” gold penny stock. At the time of writing, it was trading at $3.95 and had market capitalization of $1.19 billion. But the stock price could go much higher if gold prices work in its favor.
McEwen Mining engages in exploration, development, and production of gold and silver properties in the U.S., Mexico, and Argentina. It has two operating mines: San Jose, located in Argentina, and El Gallo, located in Mexico. (Source: “Operations,” McEwen Mining, last accessed February 3, 2017.)
In the entire year of 2016, McEwen Mining produced 101,482 ounces of gold and 3.30 million ounces of silver. In gold-equivalent ounces’ terms, it produced, 145,530 ounces. (Source: “McEwen Mining Reports 2016 Full Year and Q4 Production Results,” McEwen Mining Inc, January 16, 2017.)
The final production cost figures are not available yet but, looking at its third-quarter 2016 results, McEwen Mining’s all-in sustaining costs to produce one gold-equivalent ounce was $844.00. In the same period a year ago, these costs stood at $914.00.
As for liquidity, McEwen Mining generated $4.9 million in cash flow from operations, and ended the quarter with liquid assets of $62.5 million, made up of cash of $38.8 million, precious metals worth $16.6 million, and marketable securities amounting to $7.1 million. McEwen Mining doesn’t have debt and it hasn’t done any financing, hasn’t hedged against precious metals, nor sold any precious metal royalties.
Another thing that makes McEwen Mining a superstar gold stock: the chairman and the chief owner, Rob McEwen owns 25% of the outstanding shares. Why is this significant? It says that those who run the company have “skin in the game.” It shows loyalty and a strong belief in the company to perform well.
3. IAMGOLD Corp (NYSE:IAG)
When the gold price was around $1,900 per ounce, IAMGOLD Corp stock was trading around $20.00. With gold prices down, this company has become a gold penny stock. It trades at $4.68 and, in the midst of a sell-off in the gold market, it went as low as $1.50. IAMGOLD has market capitalization of $2.13 billion now.
Despite being a low-priced gold stock, IAMGOLD is a well-known name in the gold mining sector. The company is involved in exploration, development, and operation of mainly gold, silver, and copper properties.
IAMGOLD currently has four operating gold mines on three continents. In addition to this, IAMGOLD has one development project and five properties in the advanced exploration stage.
In the entire year of 2016, the mining company produced 813,000 ounces of gold. This was higher than what it had originally expected. In 2017, IAMGOLD expects to produce between 845,000 and 885,000 ounces of gold. (Source: “IAMGOLD Exceeds Production Target and Expects To Achieve Cost Guidance for 2016; Planned Production to Increase in 2017 with Lower All-In Sustaining Costs,” IAMGOLD Corp, January 16, 2017.)
When it comes to costs, the company expects to report all-in sustaining costs in the range of $1,050 and $1,100 per ounce for the entire year of 2016. For 2017, these costs are expected to decline to between $1,000 and $1,080 per ounce.
Its cash holdings are solid as well. At the end of third-quarter 2016, IAMGOLD had cash and cash equivalents of over $750.0 million.
4. Klondex Mines Ltd (NYSEMKT:KLDX)
The Klondex Mines Ltd stock price has increased over 140% in the past one year. It trades at around $5.10, and it wouldn’t be shocking if this gold penny stock soars as gold prices soar. It currently has market capitalization of $759.51 million.
Klondex Mines engages in production, development, and exploration of gold and silver properties with a focus in north-central Nevada. Klondex Mines’ flagship property is called the Midas Mine, which is 100% owned by the company, and historically has produced about 2.2 million ounces of gold and 26.9 million ounces of silver since 1998.
The company expects to produce between 210,000 and 225,000 gold-equivalent ounces in 2017, and expects the cash cost to be in the range of $680.00 and $710.00 per gold-equivalent ounce. If Klondex Mines is able to produce as per its projections, it will mean an increase of roughly 36% in production. (Source: “Klondex Reports Record Quarterly Production Of 51,833 Geos; 2017 Production Guidance Increased ~36% From Prior Year,” Klondex Mines Ltd, January 18, 2017.)
As for its balance sheet, Klodex Mines is very well capitalized. At the end of the third quarter of 2016, the company had $131.1 million in cash. It’s also very effective at generating cash from its operation. In the first nine months of 2016, Klondex Mines generated $44.53 million from operating activities. This was 21% higher than the same period a year ago. (Source: “Klondex Reports Third Quarter 2016 Results; Records Record Quarterly Revenues Of $53.0 Million,” Klondex Mines Ltd, November 4, 2016.)
5. Yamana Gold Inc. (NYSE:AUY)
Yamana Gold Inc. stock used to trade around $20.00 in 2013. Now, AUY stock trades at $3.30 and has market capitalization of $3.19 billion.
The company engages in the production, exploration, acquisition, and development of precious metal properties, with a main focus on gold. Yamana Gold has eight producing mines and three development projects. In addition to this, Yamana Gold has a very active exploration program in place. The company’s properties are located in the Americas, including Brazil, Argentina, Chile, and Mexico.
The company hasn’t published its entire-year 2016 results yet, but for the entire year, it expects to produce 1.26 million to 1.30 million ounces of gold at all-in sustaining costs in the range of $880.00 and $920.00 per ounce. (Source: “Operating Outlook,” Yamana Gold Inc., last accessed February 3, 2017.)
As for cash, at the end of the third quarter of 2016, the company had cash and available credit of $1.1 billion.
