Why Centerra Gold (CGAU) Is One of the Best Gold Royalty and Small-Cap Gold Stocks to Buy?

In the dynamic world of investing, it's easy to get drawn to flashy, high-growth stocks. However, there's a lot to be said for the stability and predictability of companies like Centerra Gold (CGAU). This Canadian-based gold mining company, with operations in North America and Asia, has been consistently delivering strong performance and is a top pick among hedge funds. Let's dive into why CGAU is one of the best gold royalty and small-cap gold stocks to buy.



Centerra Gold's strategic plan is a significant driver of its long-term growth potential. The company has successfully extended the mine life at Mount Milligan by two additional years through an agreement with Royal Gold, creating potential for future extensions. Additionally, the restart of operations at Thompson Creek and the progressive ramp-up of production at Langeloth in the Molybdenum Business Unit demonstrate Centerra's commitment to unlocking value across its portfolio. Furthermore, the company is progressing work at Mount Milligan on a preliminary economic assessment, expected to be completed by the end of the first half of 2025, which is anticipated to illustrate the future potential at the mine. These strategic initiatives, coupled with the expected publication of an initial resource estimate at Goldfield in conjunction with the year-end reserve and resource update, position Centerra Gold for sustained growth and value creation.



Centerra Gold's consistent operating performance and strong cash flow generation set it apart from its peers in the gold royalty and small-cap gold stock sectors. In Q3 2024, CGAU reported consolidated gold production of 93,712 ounces, with AISC of $973 per ounce, demonstrating stable production and cost control. CGAU's cash and cash equivalents grew to $604 million, reflecting robust cash flow generation even after investing $32 million in the Thompson Creek mine restart. In comparison, peers like Yamana Gold (AUY) and Eldorado Gold (EGO) have AISC of $1,050 and $1,100 per ounce, respectively, and lower cash balances. CGAU's consistent performance and strong cash flow make it an attractive investment in the gold royalty and small-cap gold stock sectors.

Centerra Gold's management team and corporate governance contribute to its enduring business model and shareholder value. The company's President and CEO, Paul Tomory, has consistently delivered on strategic plans, driving value and growth. The team's focus on operational excellence, margin expansion, and capital discipline is evident in the company's strong cash flow generation and steady production guidance. The board's independence and diversity, with 75% independent directors, ensures robust governance and accountability. This combination of effective management and strong governance contributes to Centerra Gold's enduring business model and shareholder value.



Centerra Gold's acquisition and exploration strategy has been instrumental in its long-term growth and value creation. The company has focused on acquiring high-quality assets, such as the Mount Milligan and Öksüt mines, which have contributed to its consistent production and cash flow. Additionally, Centerra Gold has been actively exploring new growth opportunities, such as the Goldfield project in Nevada and the Kemess project in British Columbia. These initiatives, along with the company's strategic partnerships and acquisitions, have allowed Centerra Gold to diversify its asset base and ensure sustainable long-term growth.



Centerra Gold's cost management and operational efficiency drive its competitive advantage in the gold mining industry. In Q3 2024, the company achieved consolidated gold production costs of $973 per ounce and all-in sustaining costs (AISC) of $1,127 per ounce, demonstrating a 12% reduction in milling costs at Mount Milligan compared to the same period last year. This improvement is attributed to a site-wide optimization program, which has enhanced safety, productivity, and cost efficiency. Additionally, Centerra Gold's focus on margin expansion in an elevated metal price environment has led to strong free cash flow generation, with cash and cash equivalents growing to $604 million at the end of Q3 2024. The company's disciplined approach to capital allocation, including share buybacks and dividends, further solidifies its commitment to returning value to shareholders.



Centerra Gold's dividend policy and share buyback program are key contributors to its shareholder value creation. The company has consistently paid a quarterly dividend, with a payout ratio of 42.41%, indicating a sustainable and growing dividend policy. Additionally, Centerra Gold has an active share buyback program, with a buyback yield of 0.55% and a shareholder yield of 3.98%. This demonstrates the company's commitment to returning capital to shareholders and enhancing shareholder value.

In conclusion, Centerra Gold (CGAU) is an attractive investment option for those seeking stability, predictability, and long-term growth in the gold royalty and small-cap gold stock sectors. With a strong strategic plan, consistent operating performance, and a commitment to shareholder value, CGAU is well-positioned to continue delivering value to its investors. As the saying goes, "slow and steady wins the race," and Centerra Gold is a prime example of a company that embodies this philosophy.