Certain small- and mid-cap gold producers are on track to make new mines operational this year or in early 2025, which will significantly improve their revenue and earnings, according to Fidelity Portfolio Manager Colin Anderson.
“I’m optimistic about these companies because the opening of these mines should boost their business and increase their overall financial viability,” says Anderson, who manages Fidelity® Select Gold Portfolio (FSAGX).
Along with its narrow focus on gold-related securities, the fund has a global mandate, which allows Anderson to target opportunities he believes are best-positioned to deliver an above-benchmark return. He seeks to uncover inefficiencies within his investible universe, primarily focusing on gold-mining companies. The fund also may own physical bullion.
At the end of May, Anderson is particularly bullish on a handful of smaller gold producers establishing new operations in a lower-risk jurisdiction, which he perceives as being more stable and less likely to be disrupted or shut down by foreign governments or other geopolitical influences.
Among them is Artemis Gold (ARGTF), a Vancouver-based gold development company that plans to open the Blackwater Gold Project in central British Columbia, a project that is now 100% owned.
“In July 2023, Artemis was forced to suspend the construction of its new Blackwater Gold Project for a few weeks due to wildfires in the region,” says Anderson. “However, it resumed construction thereafter and is now nearing gold production.”
Anderson also favors IAMGOLD (IAG), a Toronto-based intermediate gold producer that expects to open its Cote Gold Project mine in northeastern Ontario, Canada, in 2024. This will be its third mine, similar to the company’s Essakane mine in western Africa and another small mine in Ontario, he notes.
Anderson has also taken a shine to Canada’s Calibre Mining (CXBMF) and B2Gold (BTG), each set to expand its production capacity. Vancouver-based Calibre is a gold-mining company that develops gold from properties in Nicaragua, the U.S. and Canada. It plans to open a new mine in central Newfoundland and Labrador, Canada, called the Valentine Gold Mine. Operations here could potentially represent 40% of the company’s production volume, Anderson says, adding that Calibre recently stated that construction of the mine is 50% complete and that it expects mining to commence in the first half of 2025.
B2Gold, also based on Vancouver, operates mines in Mali, Africa, the Philippines and Namibia, and plans to open a new mine, the company’s fifth, in Nunavut, Canada. The Back River Mine, Anderson says, would be the company’s first mine in what he considers a lower-risk jurisdiction.
“The price of gold bullion is up strongly so far this year, but gold stocks haven’t caught up, which is in contradiction to the historical pattern,” says Anderson. “I think this backdrop provides a good setup for potentially improved earnings for gold producers, and particularly for these companies planning to open new mines.”
For specific fund information, including full holdings, please click on the fund trading symbol above. Securities mentioned were fund holdings as of May 31.
Colin Anderson is a research analyst and portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Anderson manages Fidelity Select Gold Portfolio and Fidelity Agricultural Productivity Fund. Additionally, his research coverage includes gold, fertilizer, and agricultural equipment companies within the industrial machinery industry.
Prior to assuming his current position, Mr. Anderson covered the communications equipment industry, the medical equipment industry, and the business services industry.
Before joining Fidelity as an equity research associate in 2007, Mr. Anderson was an intern in the U.S. Futures division at ABN AMRO. Previously, Mr. Anderson served as an investment management intern at Fifth Third Bank. He has been in the financial industry since 2007.
Mr. Anderson earned his bachelor of arts degree in philosophy from Princeton University.