John Rubino, [Follow John on his Substack https://rubino.substack.com/], joins us to outline the potential for the higher gold and silver prices last few months to lead to upside surprises with the Q2 earnings reports in the PM mining stocks and royalty companies. John highlights the $300 increased margin, compared to Q2 of 2023, that a royalty company like Sandstorm Gold (TSX: SSL) (NYSE: SAND) is forecasting and how significant that could be for cashflow generation. He is interested in seeing if the largest and most followed gold producer, Newmont Mining (TSX: NGT) (NYSE: NEM) can really prove to the markets that they are seeing margin expansion, with higher metals prices outpacing their rising costs. We also review that many of the higher-cost miners could actually see the largest percentage increase to their margins once the Q2 numbers come in.
This leads into a discussion on whether we’ll see more senior producers generating good cashflows and potentially attracting new investment inflows, then start a more aggressive merger and acquisition cycle. He mentions that when we starting seeing multiple larger miners courting larger projects like New Found Gold (TSX.V: NFG) (NYSE: NFGC) or even solid low-cost single-asset producers like Silvercrest (TSX: SIL) (NYSE: SILV), that it will really get the M&A momentum going in the sector. John cautions against the potential for economic contraction later this year to potentially spill over into a pullback in the precious metals sector in sympathy, but entertains the converse thesis that the PMs could also diverge from the general equities in a more structural correction.
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