Video News/Kitco Mining

Gold mining companies are generating stronger earnings and cash flow, yet their valuations continue to lag improvements in financial performance, according to Kenny Zhu, Director of Research and Investment Strategy at Sprott Asset Management. Speaking with Kitco Mining's Paul Harris, Zhu said investors may still be judging the sector by the debt-fueled expansion and costly acquisitions of the previous cycle. Sprott's research puts forward EV/EBITDA multiples at 5.7 times as of September 2026, compared with 9.9 times in June 2014, despite healthier balance sheets and greater capital discipline. Zhu warned that the industry's focus on controlling spending could create longer-term supply challenges. Declining ore grades, fewer major discoveries and mine development timelines approaching 18 years raise questions about replacing future production. He also addressed criticism of share buybacks, arguing that returning capital to shareholders remains defensible amid economic uncertainty, even as miners face pressure to invest in new projects. Zhu said central bank gold demand, real interest rates and concerns about U.S. economic growth remain important factors for the sector.