Gold Miner Special
Gold Miners on Forward EV/FCFs as low as 1? We've got a whole basket of them for you...
Hi fellow Wizards,
The gold market is finally turning. In my previous Notes I promised to share the Wizard’s favourite gold miners in anticipation of a sustained uptrend. So today we’re going to see not one but a Super Seven of miners to fill your basket with, should you so wish.
Why a Basket?
Everyone has their own approach to investing, appetite for risk and level of comfort. A number of my readers are already gold druids; others are at the acolyte stage. I’m keeping this post easy for all.
A number of producing, cashflowing junior gold miners are trading at 3x or 4x discounts to their Net Present Value. In spite of the derisking these juniors experience from being cashflow positive, if you want to capture this upside - it is still essential to manage your risk.
Single-asset miners can get derailed by jurisdiction issues, permitting delays, and operational friction. This can throttle production and in turn those cashflows.
Building a diversified basket spreads this risk and ensures you won't be wiped out by a single negative event, keeping you in the game and able to participate in those juicy upsides if the overall thesis plays out.
Existing subscribers will note that we already have 4 miners on the pitch - AltynGold, Denarius Metals, Fulcrum Metals and Heliostar Metals. Today we welcome seven more. From these readers will be able to choose their own team to suit their investment goals and style.
The central thesis
Gold miners have high leverage or ‘torque’ to the gold price. When the gold price goes up a little, a miner will tend to go up considerably more. Most of the miners on our list have 3 times or more leverage to the gold price.
The same however is true in reverse - if gold goes down a bit, miners go down by quite more than just a bit. Investing in this space demands patience and comfort with drawdowns. But as we saw last year, the rewards can be prodigious.
This is AltynGold’s chart compared to Gold last year:
But ‘gold up’ is not the central thesis here. Gold (and silver) have run up 67% and 85% since early 2025 respectively. Given that the All In Sustaining Costs (AISCs) for miners are below $2,000, and gold is now hovering around $4,400/oz, this has pushed many miners’ gross margins to a positively glittering 60-70%.
The central thesis then is that we don’t really need gold to go up for our investment goals in miners to be met. We just need the gold price to stay where it is and remain patient as the Free Cashflows roll off the truck for the thesis to play out. In the table below you will see some miners are on Forward EV/FCFs of 2 at $4,400 gold. This is extremely low. Many non-miners are on EV/FCFs of 20 or more. This shows an extreme pricing for the perceived risk inherent in miners.
Of course, these Forward EV/FCFs assume management teams execute on their mining and development plans and can contain costs. But we must also bear in mind that the competitive pressures are non-existent - worldwide gold supply only increases by 1% p.a. - and once a mine is up and running and resources defined, multi-year production visibility is high.
On the flipside of course, gold may go higher. Goldman Sachs, for example, has a price target of $5,400 just for the end of this year. In such a scenario the EV/FCFs will be compressed even further, implying even greater upside than those in our profiles below (that leverage at work again).
Junior miners not only have higher leverage to gold, but also higher upside compared to their larger brethren. At the time of writing Newmont Mining (a Major) is 25% or so off its Fair Value. Some Majors are currently overvalued when considered against their NPVs. Jaguar Mining has 266% upside to Fair Value at $4,400 Gold. If sentiment in the gold mining sector stabilises, we may thus see rotation not only from other sectors into gold mining, but also from overpriced gold miners into seriously undervalued juniors.
With all the Sovereign debt and runaway deficits in every corner of the globe at the moment, it’s also not improbable to see gold going higher. Central Banks themselves have been consistent buyers of the yellow metal and this is usually a bullish signal for miners.
The Bench and the Pitch
In my latest Portfolio Update, I described our approach as having a sub’s bench and players on the pitch. I then send updates in Substack Notes when a sub is being brought on, or a player taken off (buy or sell respectively) in the Wizard’s portfolio.
Without further ado, I would like to introduce you to our new subs:
In the table we can see the company, jurisdiction, key friction risks and capex/dilution estimates. Being producers or near-term producers, the miners I have chosen have very contained Capex risks. This is important because we want our investments to be cash churners, not cash burners. All of these miners will be at ‘steady state’ production (ie full production) by 2029 - see notes in the profiles below.
In the next set of columns we see the target EV/FCFs for each company at their current share price for the years ahead. Talisker and West Wits, for example, are currently trading on Forward EV/FCFs of below 1.
Finally we see the upsides to NPV based on our computations from the current share price. Again, these are calculated at $4.4k gold. If the gold price rises, these upsides will be amplified.
Why these miners and not others?
I have chosen these companies for a number of reasons:
Being Junior Miners, they have upsides in the multiples compared to the Majors (such as Newmont Mining and Barrick Gold) as we’ve noted.
Being producers or near-term producers, some of the major risks of investing in gold miners (especially getting caught in the funding treadmill or being bled to dilution via delays) are mitigated - this is why I have highlighted the known Capex requirements.
They are largely in good jurisdictions - generally, ‘Tier One’ is the best place to operate. While South Africa is in Tier Three (West Wits) SA is still well-regarded among miners operating there, with many saying the perceived risks are overstated. UK-listed Pan African Resources operates there. I have deliberately avoided the riskiest jurisdictions.
In most cases, the market has completely overlooked our Super Seven, or is effectively mispricing them as explorers when they are near-term producers, as the market is currently doing with Denarius Metals. Here at Wizard’s Winners we like overlooked. We don’t fish where the fish are (and the mass trawlers usually in place) but where the fish are going to be - with the market rushing in after.
Overall I have chosen these stocks for an optimal risk/reward profile. Jaguar Mining with its c.3x upside is a two mine producer in Brazil. While Brazil is a still respectable Tier Two jurisdiction, this is not a ‘high risk’ location and having two mines online makes the investment less risky. Jaguar in my view has a compelling risk/reward calculus. Ditto with the other six below.
It’s my view that these stocks will have trawlers all around them before long.
Switching metaphors and here is a reminder of the existing ‘players on the pitch’:
Now onto our new players…
New Player Profiles - where they are at and their journey ahead
For ease, I am running this in alphabetic order but will assign shirt numbers in order of which they will fit the portfolio, 1 being a key player, 7 being a super sub. Any basket weighting is advised to be higher for 1, lower for 7. Of course we already have Altyn, Heliostar and Denarius Metals on the pitch, for clarity they would all be weighted as 1s.
Right let’s get on with it.
Adyton Resources (ADY) Shirt Number 7 MCAP: $58m
The Mines: Wapolu & Gameta (Papua New Guinea).
Current Status: Pre-production developer.
The Plan: This is a 50/50 joint venture with a funding partner (East Vision International). The partner pays 100% of the $15 million startup costs for the small Wapolu mine. It needs its final mining licence to open in Q4 2027. Once the mine enters operation, the cashflows will be used to build the larger Gameta mine ($120M cost) by 2029 without the need to issue new shares or for any dilution
Target FCFs at stable state (2029): $75m post-tax (attributable to ADY)
Wizard Upside: 4.4x
Barton Gold (BGD) Shirt Number 5 MCAP: $130.5M
The Mines: Central Gawler & Tunkillia (South Australia).
Current Status: Pre-production developer.
The Plan: Barton owns 100% of an old, fully built processing mill. They have been working flat out and plan to restart it in early 2027 for $33.5 million using local surface ore. Cashflows from this restart will fund a much larger, new open-pit mine (Tunkillia) by 2030. Final environmental permits and a study update are required to make the start decision.
Target FCFs at stable state (2029): $210m (Post-tax)
Wizard Upside: 5.4x
Borealis Mining (BOGO) Shirt Number 3 MCAP: $90.3m
The Mines: Borealis & Sandman (Nevada, USA).
Current Status: Active gold producer.
The Plan: Borealis owns 100% of a producing open-pit mine and a complete, functioning processing plant in Nevada. They restarted gold pours in early 2026. Cash flow from this site will pay $41.6 million to build a second nearby mine (Sandman) by 2028. This is already producing 5,100 oz rising to 21,600 oz in 2027. No share issuance or dilution is anticipated.
Target FCFs at stable state (2029): $209.1M (Post-Tax)
Wizard Upside: 4.9x
Jaguar Mining (JAG) Shirt Number 1 MCAP: $320m
The Mines: Pilar & Turmalina (Minas Gerais, Brazil).
Current Status: Active gold producer.
The Plan: Jaguar owns 100% of two underground mining complexes in Brazil. They currently produce gold, but their processing factory is running below capacity due to waste storage limits. Securing a final surface waste permit later this year will let them run the plant at full speed, increasing production and cash flow.
Target FCFs at stable state (2029): $165M (Post-Tax)
Wizard Upside: 2.1x
Starcore International (SAM) Shirt Number 6 MCAP: $27.6m
The Mine: San Martin & La Tortilla (Querétaro, Mexico).
Current Status: Active gold producer.
The Plan: Starcore owns 100% of an operating underground gold mine. They produce steady cash flow but need higher-grade rock. They are spending $4.3 million to upgrade their processing equipment and bring in higher-grade ore from a leased neighboring deposit (La Tortilla) starting in 2027. La Tortilla, which contains 973 g/t silver, provides an immediate boost. However, the true full mine build-out relies on unlocking the massive El Creston Molybdenum-Copper project. Resolving a local surface access dispute there would allow a massive 50,000 tonnes-per-day operation, adding an unrisked $250 million in asset value.
Target FCFs at stable state (2029): $12m (Base operations only, post-tax)
Wizard Upside: 1.6x-4.5x
Talisker Resources (TSK) Shirt Number 2 MCAP: $228.7m
The Mine: Bralorne / Mustang (British Columbia, Canada).
Current Status: Ramping up production.
The Plan: Talisker owns 100% of a high-grade underground mine. They currently truck raw rock to an off-site factory owned by another company, which costs a lot in transport fees. In late 2026 they are installing an on-site mechanical rock sorter. This machine removes waste rock before shipping, doubling the gold grade sent to the mill and lowering costs. Their reserves need further defining (over 98% of the resource is currently sitting in the 'Inferred' category, requiring tight infill drilling before it can be classed as a proven reserve). This adds risk. But look at the potential reward (see below).
Target FCFs at stable state (2029): $467M (Post-Tax)
Wizard Upside: 6.8x
West Wits Mining (WWI) Shirt Number 4 MCAP: $104.5M
The Mine: Qala Shallows (Gauteng, South Africa).
Current Status: Early startup producer.
The Plan: West Wits owns 74% of a large gold project near Johannesburg. They recently dug into old, pre-developed underground tunnels to reach gold-bearing rock faster. They truck ore to a nearby plant. The key step now is connecting the mine directly to the local power grid to replace expensive diesel generators and cut costs. Production ramps up from 19,500 oz this year to 46,500 oz in 2027. Free option on the uranium mine they own.
Target FCFs at stable state (2029): $144.9M (Post-Tax)
Wizard Upside: 4x
Game Plan
As discussed, I will be sending out a Note when I buy each / any of these players. However a prudent course with miners is to buy in chunks - maybe 1/3rd at a time. Again, each to their own. Miners typically see high volatility, explosive sudden surges, and then grinding draw-downs. The surges can make us panic buy out of FOMO, and the draw-downs lead us to capitulate and vow never to buy again. This is the playing field and mind game inherent in mining investment. It’s not for everyone.
This is why it is important to keep the focus on how the company’s plan is being executed, how its production is going and what FCFs are rolling in. We are, after all, investing not in companies but Free Cashflows.
I will follow up with deep dives for the companies above in due course.
Stay magical,
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Great stuff! How about a similar exercise on silver? I'm already in silver - physical metal, ETFs & shares but "all ears for ideas"... My reasoning is that silver is volatile and ready for the next BIG leg up. TIA.
Thank you for a very interesting post.