Which Gold Miners Have Positive Cash Flow? - RBC Report

Gold

Summary

This week, we highlight North American gold producers' sustaining free cash flow margins in contrast with all-in sustaining cash cost margins. We had taken a look at sustaining free cash flow as a key component of asset positioning in our June 12, 2017 note "Multiple Matrix: A multi-factor model for aligning valuation with relative positioning on key attributes".In our view, sustaining free cash flow margin is a key driver in determining asset positioning and avoids inherent flaws in analyzing margins on all-in sustaining cash costs (AISC). This is due to the variable nature of AISC and visual benefit of by-product credits on cash costs. We contrast the sustaining freecash flow margins for North American producers over the next few years (

We believe that by focusing on a company's relative cost structure based on unlevered sustaining free cash flow margins, investors can better analyze companies on an equal basis as it captures a company's cost of production and tax structure while removing the effects of interest payment