When it comes to picking top mining stocks, quality is the name of the game, regardless of their operational focus on exploration, development or production.
This is because investors need hard numbers to evaluate management performance, assign a probability to their outlooks, and ultimately justify ownership of a stock over the long term.
Any talk of prospectivity without evidence merely suggests the latest casualty among the less than 1 in 10,000 projects that goes on to become a mine, according to the Ontario Mining Association.
It’s only by building positions in assets with demonstrated potential, attached to in-demand commodities, that investors can weather the mining industry’s extreme volatility and come out the other side with more cash in their pockets.
Chakana Copper
When it comes to junior mining stocks, few are more attractive than Chakana Copper (TSXV:PERU), whose Soledad project in Peru’s mining-friendly Ancash province offers exposure to an inferred resource of 130 million pounds of copper, 191,000 ounces of gold and 11.7 million ounces of silver.
These numbers stem from testing only 28 out of 154 defined targets, with a fully funded 3,000-metre drill program beginning earlier this month, positioning the company for positive long-term news flow as it explores its untapped land package.
With copper expected to experience a steepening deficit well into the 2030s as the electric vehicle industry ramps up to compete with combustion engines, investors may want to take advantage of the stock’s 70.73 per cent loss since 2019 before it re-rates on the back of rising copper prices, which are testing the 10-year high.
David Kelley, Chakana Copper’s president and chief executive officer, joined Stockhouse’s Brieanna McCutcheon to speak about the mineral explorer’s ongoing 2024 drilling program. Watch the interview here.
Discovery Silver
When it comes to development-focused mining stocks, Discovery Silver (TSX:DSV) should be towards the top of your due diligence list, thanks to its Cordero project in Mexico ranking as one of the largest undeveloped silver resources in the world.
The project, acquired in 2019 and in the mining-friendly state of Chihuahua, boasts a net present value (5 per cent) of US$1.2 billion, rising to more than US$2 billion in year 4, and low all-in sustaining costs (AISC) per ounce of silver equivalent under US$13.50 over a 19-year mine life, with a 2022 feasibility study delineating production of 259 million ounces of silver, 2.6 billion pounds of lead and 4.4 billion pounds of zinc over the life of mine.
Backed by significant expansion opportunities (slide 12), a commodity Eric Sprott sees almost 10x-ing from current prices to US$200, and the stock’s 65 per cent fall from its five-year high, potential investors should let their assessment of management dictate whether the world-class Cordero’s journey through permitting, construction and production is worth the wait. Judging by Discovery’s team of industry stalwarts, led by CEO Tony Makuch, a former president and CEO of Kirkland Lake Gold, now feels like a propitious time to build a position.
Makuch recently spoke with Stockhouse’s Ryan Dhillon about Discovery Silver’s Q4 2023 and full-year 2023 financial results. Watch the interview here.
Mandalay Resources
Among the select group of miners that make it to production, Mandalay Resources (TSX:MND) is notable for its attractive combination of small capitalization, at C$203.97 million as of Thursday, a production track record spanning more than a decade, and numerous expansion opportunities setting it up to generate significant long-term shareholder value.
Mandalay’s Björkdal gold mine in Sweden and Costerfield gold-antimony mine in Australia have established combined average run-rate production between 80,000-100,000 ounces of gold equivalent per year going back a decade, with AISC comfortably below US$1,500 per ounce providing a healthy margin to the spot price of US$2,374.30 as of 1:57 pm ET Thursday.
In conjunction with consistent production, the company has increased Björkdal’s reserve life to nine years as of April 2024, while maintaining approximately two to five years of reserve life at Costerfield since 2012.
Propelled by gold flirting with all-time-highs, the robust infrastructure of its leading jurisdictions, and a management team steeped in gold mining experience across small and large-cap companies, Mandalay has generated positive net income for four consecutive years, including US$9.31 million in 2020, US$54.88 million in 2021, US$23.51 million in 2022 and US$7.86 million in 2023, while turning positive on a net debt-to-cash basis in Q1 2024.
Mandalay stock has tracked growing profitability, adding 109.52 per cent since 2019, but still remains down by 81.5 per cent compared with its 10-year high, signalling it has plenty of room left to run as the gold producer explores its more than 14,000-hectare land package.
Frazer Bourchier, Mandalay Resources’ CEO, sat down with Stockhouse’s Brieanna McCutcheon to speak about the gold producer’s robust Q1 2024 results. Watch the interview here.
Join the discussion: Find out what everybody’s saying about these top mining stocks on the Chakana Copper, Discovery Silver and Mandalay Resources Bullboards, and check out Stockhouse’s stock forums and message boards.
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