Contents

Introduction: 5 Things

The latest RBC gold equity sector commentary (provided by a GoldFix community Founder1 ) outlines a series of unusual (to the Bank’s eyes) developments and forward-looking considerations. The focus is on performance divergence between gold and equities2, earnings results, capital discipline, emerging project developments, and the prospect of a new senior producer entering public markets. Together, these themes converge in how valuations, investor flows, and operational dynamics are shaping the outlook for the sector.

The work comes from RBC Capital Markets’ Global Metals and Mining Research team, led by Josh Wolfson. The note examines relative performance, post-earnings reactions, balance sheet strategies, and project pipelines. The extensive note covers earnings with plenty of graphics corroborating their assertions

Lets go through those points one at a time. It’s quite good and a long way form their report of last year which voiced frustration at the industry’s roadblocks. 3

In short: Miners are finally coming into their own and the market place is just starting to shake off years of frustrating and investor malaise.

Time permitting we will do a mini-pod this week giving some observations on why this could be a very important moment for miners in the pantheon of investment choices4. For now, here’s a drilldown into their report

RBC’s Bottom Lines:

1. Equity performance has been strong, earnings are improving, and capital returns are growing.
2. At the same time, valuations have normalized, retail enthusiasm has reached somewhat elevated levels, and future planning will test how companies balance conservative assumptions with strong spot prices.
3. Barrick’s Fourmile project and the potential Navoi IPO provide longer-term considerations that could reshape the competitive landscape. (Zeitgeist alert)

1. Gold Equities Outpacing Gold

“Gold equities sharply outperforming gold when gold prices are not rising is rare.”

Over the past three months, gold equities have appreciated by 25 percent compared with only 4 percent for bullion. Historically, equities have tended to outperform when gold prices were trending upward, since miners provide operational leverage. The current period stands out because equities are leading while gold is largely flat. RBC identifies two considerations. First, it is rare for equities to outperform in a stagnant gold price environment. Second, such periods have often been followed by underperformance relative to bullion, warranting caution.

Valuation levels underscore the shift. In mid-June, large-cap miners traded at only 0.9 times NAV with free cash flow yields exceeding 8 percent. By mid-August, valuations had risen to 1.2 times NAV and yields compressed to roughly 6.5 percent. These are still more attractive than most other GICS sectors, but no longer present the anomaly seen earlier in the year. ETF flows into gold miners remain minimal, futures positioning is above average but not extreme, and gold ETFs are still receiving inflows. In contrast, retail interest in gold-linked investments is described as extremely high, surpassing levels observed in April after tariff news, which has historically aligned with cycle tops.

2. Lessons from Second-Quarter Earnings

“Large cap gold producers reported an average 4% higher production than the consensus and 3% lower AISC.”

RBC highlights that second-quarter results were broadly positive. The median gold equity rose 0.9 percent relative to its benchmark after reporting, placing results in the top quartile of the past five years. Large-cap producers achieved production 4 percent above consensus and all-in sustaining costs 3 percent below expectations. This translated into 33 percent higher free cash flow and 13 percent higher earnings compared to consensus.

Capital allocation remains a central theme. Combined dividends and share repurchases grew 59 percent quarter-over-quarter and 257 percent year-over-year. Management commentary emphasized ongoing returns to shareholders and the development of internal growth projects. Barrick and Newmont, which together represent about 20 percent of the benchmark index, have historically weighed on sentiment due to operational challenges. Both companies exceeded expectations in the first half, potentially removing a longstanding overhang on sector performance.

3. Planning for 2026: Reserve and Budget Assumptions

“Reserve pricing across our coverage averages a highly conservative ~$1,575/oz.”

A major question moving into late 2025 is how companies will frame their assumptions for reserves and budgets in the 2026 planning cycle. Spot gold is around $3,340 per ounce, yet RBC projects the three-year trailing average to settle near $2,500 by year-end. Current reserve price assumptions across coverage are anchored at conservative levels, averaging $1,575 per ounce.

Large-cap producers remain reluctant to incorporate higher gold prices, except where short-duration assets can be extended, such as Agnico Eagle’s Amaruq and Kinross’s Bald Mountain. Most of their focus is on funding organic growth projects, with capital allocation expected to increase but still remain within conservative parameters. Mid-tier producers, however, are showing more willingness to revisit shelved projects. Examples include Centerra’s Goldfield revival, IAMGOLD’s Nelligan and Monster Lake, and B2Gold’s Gramalote. Mid-caps are also more open to acquisition strategies, with recent activity such as Pan American and MAG’s combination, Torex’s purchase of PRYM, and Newmont’s divestitures. Investor reception to these transactions has generally been positive.

4. Barrick’s Fourmile Project

“Our analysis of this slide indicates total resources could comfortably more than double to a potential >15moz and overall grades could be >15 g/t.”

Continues here