The return of the gold bull market in 2016 is driving massive cash generation for Canada’s largest miners of the metal.
The biggest producers reported second quarter results on Wednesday night. And while the results were mixed compared to analyst expectations, a key theme was stronger cash flow and improving margins.
Barrick Gold Corp., the world’s biggest gold miner, had adjusted earnings of US$158 million and a whopping US$274 million of free cash flow. Kinross Gold Corp. and Agnico Eagle Mines Ltd. also reported major improvements in cash flow generation.
The one exception was Goldcorp Inc., which had significantly lower year-over-year gold production due to several factors, including a rapid workforce reduction at the Cerro Negro mine in Argentina. Goldcorp’s adjusted operating cash flow declined 41 per cent to US$307 million.
The results illustrate the changing times in the gold industry. Until prices rebounded early in 2016, gold miners were mired in a four-year bear market that forced them into a painful cycle of cost cuts, capital spending cuts, dividend reductions and asset sales. Now they can zero in on growth.
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