Goldcorp Inc. (USA) (GG), Yamana Gold Inc. (USA) (AUY): These 4 Miners Can Still Thrive With Gold At $1,200

For one, Royal Gold’s obligation ends with its cash investment into a mine. In return for its royalty interest in a mine’s production, Royal Gold has no other prevailing costs. That means mine upkeep and expansion beyond its initial investment isn’t its concern. Royal Gold has a well-diversified portfolio of royalty interests, consisting of 36 developed, and 22 in-development, mines. With low-cost purchase deals in place and essentially few corporate expenses, it’d take a huge drop in gold prices to affect Royal Gold’s profitability.

Silver Wheaton Corp. (USA) (NYSE:SLW)
It’s an often forgotten about name, when it comes to gold mining since most investors will focus on its multiple silver contracts, but mining royalty interest company Silver Wheaton is another attractive investment.

Like Royal Gold, Silver Wheaton Corp. (USA) (NYSE:SLW) supplies cash upfront to silver and gold miners that don’t have the appropriate capital needed to build out their mines. In return, Silver Wheaton locks in long-term contracts that allow them to purchase some, or all, of the produced silver and gold at a rate that’s extremely attractive relative to current prices. Last year, Silver Wheaton pulled the trigger on a deal with HudBay Minerals Inc Ord Shs (NYSE:HBM) for $750 million, which will allow it to purchase 100% of the gold production of HudBay’s flagship 777 mine through at least 2016, and then 50% of the remaining gold throughout the life of the mine thereafter, at an averaged fixed cost of just $400 an ounce (which is subject to an inflationary adjustment).

A bump in the road
Gold has clearly hit a bump in the road, but reasons to expect a rebound are still readily visible. Whether it takes weeks, months, or perhaps even years, for gold to find its footing, these four miners are unlikely to face any profitability pressures or much more downside in my opinion.

The article These 4 Miners Can Still Thrive With Gold At $1,200 originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool has no position in any of the stocks mentioned.

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