Today we are going to talk about Yamana Gold and about my holdings of their stock. Yamana Gold Inc. is a Canadian company that owns and operates gold, silver and copper mines in Canada, Chile, Brazil and Argentina. Yamana as of 2020 operates 5 mines. Headquartered in Toronto the company was founded in 1994 and became listed on the Toronto Stock Exchange in 1995 and on the New York Stock Exchange in 2007. Company market cap is 6.3 B and employees around 5 thousand people. Yamana is considered a mid-tier gold mining producer. Mid-tier producers are stocks that generally have the best risk/reward profiles. The reason why is because they generally are growth-oriented stocks and have a strong enough balance sheet to find a way to grow. It’s not unusual at all to see a mid-tier producer double or triple in size in a short period of time. Especially when the price of gold is rising. Like my Yamana Gold holdings for the past year they almost doubled. I invested around $40K and right now the shares are worth around$92 000. Mid-tier gold miners produce between 300k to 1m ounces of gold annually. Examples of good mid tier gold mining producer are of course Yamana Gold, Kinross Gold, Premier Gold and Alamos Gold. The major producers of gold run above 1milion ounces per year and more and an example of a major producer are: Barrick Gold, Newnount, Goldcorp, Agnico Eagle mines. The third smallest category are junior miners who produce below 300k ounces per year. I will not give you good examples of junior miners because I don’t feel confident to point any of them.
Mid-tier gold producers have really the best upside potential. If you compare them to major producers they have a room for increasing their production and in contrast with junior miners they already have infrastructure developed to handle big output growth. Where juniors are very often in the early stage of developing the projects and from developing the project to the time when mine is operational and is bringing income to the company there is a long and very often painful way. Mining is extremely complicated business and many independent factors play a role in mining industry. For example political situation in the country, local governments, local communities, environmental groups and more. If mining company wants to operate in certain country they have to find common ground with all those institutions, groups of people, governments and on the top of that they have to be ready for situations when the government changes and there is a different political group at the power with different political views towards the mining industry. Good mining companies have to have talented engineers and skilled diplomats as well in order to be successful. Personally I don’t own any junior miners because there is too much risk involved in owning junior companies but you can profit much more by owning junior companies. I’m trying to mitigate the risk when investing in the gold mining industry and on top of that I don’t have experience and knowledge with finding good junior mining companies. That’s why I stick with mid-tier and major producers of gold. I take very calculated risks towards investing in gold mining stocks.