Looking to start a portfolio without breaking your bank account? Want some exposure to the mining industry at the same time? These two gold companies offer precious metals exposure at an inexpensive price. Each is endeavouring to control costs while boosting production to foster efficient growth.
IAMGOLD Corp. (TSX: IMG) (NYSE: IAG) has five operating gold mines and one of the world’s top three niobium mines. Its operating gold mines include current joint ventures. In 2013, the company unveiled its three strategic priorities of cost reduction (aiming for cost reductions of $100 million), cash preservation, and capital discipline.
The company’s focus is on controlling expenditures, and it is realizing success on this front. For Q2 2014, its all-in sustaining costs (gold mines) were $1,136 per ounce sold versus $1,251 per ounce sold from Q2 2013 and $1,198 per ounce sold from Q1 2014.
IAMGOLD’S gold production increased from Q1 2014. Its Essakane gold mine in Burkina Faso — 90% of which it owns, with the government of Burkina Faso holding the rest — saw production increase by 35%. In Q2, IAMGOLD had higher grades and throughput at Essakane, whose mill expansion drove throughput up considerably and is propelling growth in production. Subsequently, the company is now emphasizing improving its cost structure.
Its Niobec underground niobium mine is in Quebec, and encompasses roughly 1,735 hectares. It consists of two mining leases and includes 43 claims totaling 1,605.6 hectares. This mine continues to be a strong performer for IAMGOLD.
Furthermore, the company commenced commercial production at its Westwood Project in Quebec on July 1, 2014. IAMGOLD holds this project 100%. The Westwood Project encompasses 1,925 hectares, and consists of 120 titles, one mining lease, one surface lease, and three tailings leases.
Then there’s the world’s fifth-largest gold producer, Kinross Gold Corporation (TSX: K) (NYSE: KGC), which also focuses on cost controls while advancing production. Its Q2 2014 all-in sustaining cost came in at $976 per Au eq. oz. sold, versus $1,038 in the same quarter last year.
Regarding Q2 2014 results, CEO Paul Rollinson said, “Kinross’ focus on financial discipline and operational excellence continues to deliver results, with another strong quarter that puts the Company at the high end of its 2014 guidance range on production, and the low end of its 2014 guidance range on costs at the half-year mark.”
Kinross Gold has operating mines in the U.S., Russia, Brazil, Chile, Mauritania, and Ghana and development projects in Chile and Mauritania. It has development and grassroots exploration in Canada and Mexico, and is engaged in exploration at its Fort Knox mine in Alaska, Round Mountain mine in Nevada, as well as Kettle River-Buckhorn mine in Washington.
The company’s Kupol and Dvoinoye, Russia operations had higher production versus Q1 2014 and year over year. Kinross processed higher grade ore from its Dvoinoye operation in Q2. Kinross’ outlook for this year is that it will produce around 2.5-2.7 million gold equivalent ounces. Last year, the company had record production of 2.63 million gold equivalent ounces.
The expectation is that Kinross Gold’s potential Tasiast mill expansion (Mauritania) will produce approximately 850k oz. at approximately $500/oz. average for the first five years. The mill expansion could add a significant source of new production, lower Kinross’ overall cost structure, and produce substantial cash flow.
To me, you can’t go wrong with either stock to start off your portfolio.
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