Despite gold prices hovering near record levels, the Zacks Mining – Gold industry’s outlook remains challenged by escalating production costs and a tight labor market. Depleting resources, declining output from old mines and the extended lead times involved in bringing new mines online, along with the capital-intensive nature of such projects, indicate the industry is headed for a supply deficit, which is concerning.
Amid this uncertainty, Agnico Eagle Mines (AEM – Free Report) , Barrick Gold (GOLD – Free Report) , Franco-Nevada Corporation (FNV – Free Report) , Kinross Gold (KGC – Free Report) and Alamos Gold (AGI – Free Report) are well-poised for growth, backed by their strong balance sheets, efforts to lower costs and growth initiatives.
About the Industry
The Zacks Mining – Gold industry mainly comprises companies engaged in extracting gold from mines. The mines may either be underground or open pits. Mining is a long and complex process, and requires significant financial resources. It involves exploration to evaluate a deposit’s size; assessing ways to extract and process ore efficiently, safely and responsibly; and developing the mine before the actual mining process. It normally takes 10-20 years for a gold mine to produce material that can finally be refined. Players in the industry nowadays use a range of sophisticated techniques to extract gold and convert it into dore bars, an alloy of gold and silver, alongside other impurities. These are then sent for purification, after which gold is purchased as bars or coins, or used in jewelry or other purposes.
Major Trends Shaping the Future of the Mining – Gold Industry
Solid Trend in Gold Prices: Spot gold hit a record high of $3,059 an ounce following U.S. President Donald Trump’s announcement of new auto tariffs. Gold has remained above the $3,000 per ounce mark since mid-March, driven by safe haven demand amid geopolitical and economic uncertainties. The imposition of U.S tariffs and fears of an escalating trade war also stoked prices. The Federal Reserve signaled the possibility of two interest rate cuts this year. Gold has gained 16.3% year to date and this trend is likely to persist, supported by central bank buying and global tensions. However, investor attention is now focused on the key economic data, such as the Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, which could provide further cues on monetary policy.
High Costs, Labor Shortage Are Worrisome: The industry has been facing a shortage of skilled workforce, causing a spike in wages. Industry players are persistently grappling with escalating production costs, including electricity, water, and material and supply-chain issues. Since the industry cannot control gold prices, it focuses on improving the sales volume and the operating cash flow, and lowering unit net cash costs. The industry participants are opting for alternative energy sources, such as solar or wind farms, to minimize fuel-price volatility and secure supply. Miners are committed to cost-reduction strategies and digital innovation to drive operating efficiencies.
Declining Supply a Concern for the Industry: Depleting resources, declining supply in old mines and the lack of new mines have been a perennial problem for the industry. Due to the scarcity of discoveries and exhaustive existing resources, miners prefer building up reserves through acquisitions rather than digging new ones that are risky and capital-intensive. On the demand side, the use of gold in energy, healthcare and technology is rising. India and China account for around 50% of consumer gold demand. The yellow metal has long been considered a safe-haven investment in financial or political uncertainty. Gold demand continues to be on the rise from central banks. Therefore, there will be an eventual demand-supply imbalance.
Zacks Industry Rank Indicates Dull Prospects
The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. The Zacks Mining – Gold Industry, which is a 39-stock group within the broader Zacks Basic Materials sector, currently carries a Zacks Industry Rank #153, which places it at the bottom 38% of 246 Zacks industries.
Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Versus S&P 500 & Sector
The Mining-Gold Industry has outperformed the S&P 500 Index and the Basic Material sector in a year. The stocks in the industry have collectively gained 43.7% against the broader sector’s fall of 3.9%. The S&P 500 has risen 10.7% in the same time frame.
One-Year Price Performance
Industry’s Current Valuation
On the basis of the forward 12-month EV/EBITDA, a commonly used multiple for valuing gold-mining companies, we see that the industry is currently trading at 4.58X compared with the S&P 500’s 13.11X and the Basic Material sector’s forward 12-month EV/EBITDA of 7.56X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Enterprise Value/EBITDA (EV/EBITDA) F12M Ratio
Over the last five years, the industry traded as high as 8.40X and as low as 4.58X, the median being 6.22X.
5 Mining-Gold Stocks to Keep an Eye on
Agnico Eagle Mines: The company recently closed the acquisition of O3 Mining, gaining ownership of the Marban Alliance property. The integration of this property with the AEM’s Canadian Malartic land package will create significant and unique synergies. The company’s focus remains on extending mine life at existing operations, testing near-mine opportunities and advancing key value driver projects. Exploration priorities for 2025 include mineral resource conversion and expansion at the Detour Lake underground project and East Gouldie at Canadian Malartic, as well as advancing Hope Bay. AEM has managed to lower costs through the optimization of drilling productivity and innovation efforts. Its efforts to lower debt are also commendable.
The Zacks Consensus Estimate for the Toronto, Canada-based gold mining company’s 2025 earnings indicates year-over-year growth of 6.4%. AEM has a trailing four-quarter earnings surprise of 16.4%, on average. The company has a long-term estimated earnings growth of 31.6%. Agnico Eagle Mines currently has a Zacks Rank of 3.
Price and Consensus: AEM
Barrick Gold: The company is well-placed to benefit from the progress in key growth projects that should significantly boost its production. Its major gold and copper growth projects, including Goldrush, the Pueblo Viejo plant expansion and mine life extension, Donlin Gold, Fourmile, Lumwana Super Pit and Reko Diq, are currently being executed. These projects are advancing on schedule and within budget, underpinning the next generation of profitable production. Barrick has a solid liquidity position and generates healthy cash flows, positioning it well to take advantage of attractive development, exploration and acquisition opportunities, drive shareholder value and reduce debt.
The Zacks Consensus Estimate for this Toronto, Canada-based company’s earnings for fiscal 2025 indicates 8% year-over-year growth. GOLD has a trailing four-quarter earnings surprise of 12%, on average. The company currently carries a Zacks Rank of 3 and a long-term estimated earnings growth of 11.4%.
Price and Consensus: GOLD
Franco-Nevada: FNV appears on a promising long-term trajectory, backed by a healthy portfolio of streaming and royalty agreements on several properties mined by some of the most reputable mining companies in the world. It expects total GEOs to be between 465,000 and 525,000 in 2025, indicating a 7% year-over-year increase at the midpoint. Given its focus on cost management, FNV has been generating high margins. The company is debt-free and uses its free cash flow to expand the portfolio and pay out dividends. On Feb. 28, 2025, Franco-Nevada acquired a precious metals stream from Sibanye-Stillwater’s South African mines for $500 million, expecting more than 45 years of deliveries, mostly gold and platinum, with initial deliveries totaling around 27,000 GEOs.
The Zacks Consensus Estimate for this Toronto, Canada-based gold-focused royalty and stream company’s earnings for fiscal 2025 indicates 15.9% year-over-year growth. FNV has a trailing four-quarter earnings surprise of 2.8%, on average. The company has a long-term estimated earnings growth of 3.6% and currently carries a Zacks Rank of 3.
Price and Consensus: FNV
Kinross Gold: The company’s strong liquidity position and substantial cash flows allow it to finance its development projects while paying down debt and driving shareholder value. Kinross Gold has a strong production profile and boasts a promising pipeline of exploration and development projects. Its key development projects and exploration programs, including Great Bear in Ontario, the Redbird pit at Bald Mountain and Round Mountain Phase X in Nevada, remain on track. These projects are expected to boost production and cash flow and deliver significant value.
The Zacks Consensus Estimate for this Toronto, Canada-based gold mining company’s earnings for fiscal 2025 indicates 14.7% year-over-year growth. KGC has a trailing four-quarter earnings surprise of 23.7%, on average. Kinross Gold has a long-term estimated earnings growth of 21% and a Zacks Rank of 3.
Price and Consensus: KGC
Alamos Gold: The company projects production to grow 24% to 680,000-730,000 ounces by 2027, driven by Island Gold district, Young Davidson and Mulatos. All-in-sustaining costs (AISC) are expected to decrease 8% over that time frame from that reported in 2024, due to low-cost growth from Island Gold following the completion of the Phase 3+ Expansion in the first half of 2026. AGI announced a construction decision on the Lynn Lake project in January 2025, with initial production expected in the first half of 2028. With an average annual production of 176,000 ounces over its first 10 years, Lynn Lake is anticipated to play a significant role in taking the company’s production to approximately 900,000 ounces per year (implying 59% year-over-year growth from 2024).
The Zacks Consensus Estimate for the Toronto, Canada-based company’s 2025 earnings indicates a 41.2% year-over-year increase. AGI has a long-term earnings growth rate of 10.1%. It has a trailing four-quarter earnings surprise of 7.9%, on average. AGI currently has a Zacks Rank of 3.
Price and Consensus: AGI
