by John Rubino
The idea that a rising gold price is good for gold miners is intuitively easy to grasp. But to understand just how good, you have to see the numbers.
Consider the second-quarter reports of mid-tier gold miners Pretium Resources and Great Panther Mining.
Beginning with Pretium, ounces of gold sold went up slightly compared to last year’s second quarter and the average price the company received for each ounce of metal went up somewhat more, by 32%. Then the magic of operating leverage kicked in. Revenue rose by 47%, operating earnings more than doubled and net earnings more than tripled. Free cash flow – the ultimate point of the whole exercise – rose by 105%.