In their recent Industry report Raymond James analysts Farooq Hamed and Judith Elliot expect significant rebounds for precious metal producers in 2021.
According to Mr. Hamed, “in general, precious and base metals producers continued to generate positive [free cash flow] in the fourth quarter of 2020, however at lower levels than in the previous quarter due to lower quarterly average gold prices. We expect increasing production over the next three years.”
In most cases, this involves a return to ‘normal’ operations after 2020 was marked by downtime caused by Covid-related shutdowns. Among precious metal producers the report expects strong production gains from are firms like Agnico Eagle, Yamana Gold and Calibre Mining.
Interesting to note that Raymond James has Calibre (TSX:CXB) as a “strong buy”, and BMO Nesbitt Burns has also started Calibre Mining coverage with a “market perform” rating. You can watch Ryan King’s complete Calibre Mining presentation from the 2021 World Outlook Financial Conference, along with 15 other precious metals companies HERE.
Elsewhere Mr Hamed and Ms. Elliott see exploration spending ticking up across the sector. With improved balance sheets and a focus on replacing reserves, producers are providing forward looking guidance of significant increases in 2021 exploration budgets.
At the same time operating costs are generally expected to be higher year over year as companies factor in additional health and safety costs related to Covid protocols and higher inputs on cost inflation.