Are gold stocks set for explosive growth like last summer? Yamana exec Peter Marrone on challenges, opportunities
With the challenges of shutdowns brought by COVID-19 largely behind us, miners can now focus on rebuilding production to maximum capacity.
Inflation now remains the biggest challenge to miners, said Peter Marrone, executive chairman of Yamana Gold.
“It seems to me that the challenge that is fronting this industry presently is inflation, and how to interpret it. Is it transitory, or does it have a stickiness to it? And on what, should we be concerned about as it relates to inflation, is it labor, or is it consumables?” Marrone told David Lin, anchor for Kitco News.
Marrone highlighted that while gold miners’ share prices have dropped this year, concurrent with the drop in gold, revenues and production have continued to grow. A compression of share price, coupled with growth in earnings before interest, depreciation and amortization (EBITDA), leads to more attractive valuations.
“If we apply any of the measures, if we apply multiple to cash flow, multiple to net asset value, our net asset value has gone up, our multiple to net asset value has gone down. Our multiples to cash flow…we’re trading at about five or six times cash flows, and normally in this industry, and certainly some companies in this industry, can trade higher than ten times cash flow. In other industries, they’re trading at higher than ten times cash flow, so I think there’s a lot of room for upside,” he said.
For more information on Yamana’s latest project updates, as well as Marrone’s outlook on the gold sector, watch the video above. Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV).