Miners and Dividends
Comment of the Day

August 04 2021

Commentary by Eoin Treacy

Miners and Dividends

Eoin Treacy's view

Gold prices have been ranging between $1700 and $1900 since November. That’s allowed gold miners to sell production at a consistently higher price. That margin boost has allowed a significant number of companies to pay down debt.

That’s a major achievement for the sector. Many miners were saddled with large debt piles when the last bull market peaked in 2011. They had borrowed heavily on the expectation that prices only go up. It has taken the survivors a decade to erode that burden.

An increasing number have no debt at all. When miners have no debt and increasing cash on their balance sheets, they have two choices. They either spend the money on exploration/expansion or they boost/introduce dividends or buy back stock. Often they do both.

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