'The seniors are playing a defensive game' - Daniel Earle
During a gold bull market, you need to go with growth, said Daniel Earle, CEO of Solaris Resources (CVE:SLS).
On Friday, Earle recorded Kitco Roundtable podcast with correspondent Paul Harris; editor Neils Christensen; and mining audiences manager, Michael McCrae.
At the 121 Mining Investment conference this past week, Earle noted comments from a mining CEO who said seniors need to be disciplined with their capital allocation during this up cycle and not go out and buy things that are at a high valuation.
"I think that that's a terrible mistake. I think the problem [during] the last cycle is that they were buying at the end of the cycle," said Earle.
"If you look at how to create value in this business--its a depleting business. You need to be buying up through the troughs in the cycle. In a gold bull market, you need to go with growth. That's where the outsize returns are going to be. Whereas within the seniors, they're playing a defensive game of not making mistakes. And I think that may appeal to large institutional investors, but that's not the square that we play in."
The panel also discussed the outstanding quarters that the gold miners are having now that they are mostly out from under COVID-19 work disruptions, and gold traded above $1,900 for most of the quarter.
This past week Newmont announced today a 60% increase to its dividend, its second dividend increase in 2020. It also recorded its best quarter in history. It realized an average gold price of $1,913. With an all-in-sustaining cost of $1,020, it was realizing over $900 on every ounce sold.
Agnico Eagle doubled its net income in the first nine months of the year at $306 million compared to the previous year. On top of the good results, the company increased its quarterly dividend by 75%.
At Yamana, gold cash tripled, and dividends are up 425% over the past 16 months.
Links mentioned during the podcast.