Gold mining shares can be broken down into four categories: majors, mid-tiers and junior gold producers, and gold exploration companies. To find out which category of gold mining shares I am most interested in, you can read the note at the bottom of this page.
As the term ‘juniors’ also refers to a category within the mineral resource stocks, it is important to be aware of what exactly is being described!
4 Gold Mining Shares Categories
| Category | Annual Production (in ounces) |
Description |
| Majors | > 1.000.000 | The biggest gold miners are called the majors. The main focus of the majors is to increase or maintain their depleting reserves. Often, they realize this by acquiring the mid-tiers and juniors. Investing in major gold producers is believing in a further appreciation of the gold price from the current level. |
| Mid-Tiers | 200.000 – 1.000.000 | Management of the mid-tiers often want to grow the company in order to become a major. Often, they attempt to achieve this by acquiring, or merging with, other mid-tiers or juniors. Mid-tier gold producers provide more leverage to an appreciating gold price than majors. |
| Juniors | < 200.000 | The smallest gold miners are called the juniors. Investors should realize that juniors often have to raise capital to expand their production or to fund their exploration activities. The junior gold producers give the most leverage from all the gold producers to an appreciating gold price. |
| Exploration Companies | – | Gold stocks with no production are called gold exploration companies. Exploration companies often turn to the capital market in order to raise the funds necessary for their exploration activity. Even if they don’t find the next big gold project, an investment in an exploration company can be extremely profitable. Of course, the risks within this category of gold mining shares are the highest. |
Note: My interest in gold mining shares is mainly focused on the mid-tiers and junior gold producers. The reason for this is that I believe that when the gold price rises further, these categories will generate the most free cash flow in relation to their current market cap. As a consequence, I expect the share prices of these stocks to rise the most. In addition to these two categories of gold producers, I feel comfortable investing in gold exploration companies that have a substantial amount of cash on their balance sheet. Furthermore, these exploration companies should already own a very promising project on which a resource report has been established according to the CRIRSCO standards.
