Will gold miners' profit rise on higher gold prices?

By CanadianMiningReport.com Staff Writer / May 13, 2021 / Article Link

Futures for TSX rose on Monday as gold prices gained on low interest rate hopes. A rising inflation followed a cyberattack on a U.S. pipeline operator due to supply concerns.

Spot gold XAU was up 0.46%, reaching $1,838.4 per ounce. This is its highest since Feb. 11 at $1,842.9. U.S. gold futures GCv1 gained 0.5% to $1,840. GOL/.

As lockdown starts to ease, many mid-tier and junior gold miners are on track to meet their annual gold production targets. Some like Amex Exploration (TSX:AMEX) were aided by extremely positive drilling results that set the stage with a massive high-grade gold discovery in Quebec, Canada. The region is home to some of the largest mining companies on the planet and has consistently provided substantial veins. Amex has focused on this area due to its potential for a large discovery. It joins numerous other Canadian gold miners that operate in this area.

Currently, Amex is developing their Perron Property, which lies due West of this huge past producing mine. In 2019, this mine produced a massive, which catapulted the mining stock among the best gold stocks on the TSX Exchange. It also earned the junior gold miner the title of one of the top 50 best companies on the OTCQX in 2020. For investors who decided to buy the gold stock prior to the discovery, this translated to a 7,000% return in 12 months.

The appeal of investing in mining stocks of mid-tier and junior miners comes from the prospect of a major gold discovery or replicating one. Gold miners who operate in close proximity to one another are always interesting because gold deposits are usually not isolated.

Similarly to Amex, Starr Peak operates in the region, expecting its drill targets to be very good. Their most recent discovery is evidence of a VMS deposit with rock containing multiple base metals, including zinc, copper, silver and gold. The company has reported not missing out on any of its recent 12 drill holes.

Promising results from its drill program put Starr Peak (TSX:STE.VOTC:STRPF) at the start of what looks like a metals uptrend.  Both silver and gold prices are gearing for growth, raising confidence in the mining stocks of companies with on-going drill programs.