There are plenty of options when it comes to investing in stocks, and mining stocks is one of them. But just like any other type of stock, it’s important for investors to do their due diligence to ensure the mining company has a solid profile. Investors should also take a look at the stock’s price history and the location of the mine before buying, given evolving political environments across the globe.
Let’s take a closer look at investing in mining stocks in Canada and check out some of the top stocks to consider investing in.
What Are Mining Stocks?
Mining stocks are stocks from mineral-extraction companies. They can be divided into two separate groups: majors and juniors.
- Majors are long-established mining companies with ample capital that span across the globe and provide investors with steady cash flow.
- Juniors are the opposite of majors. They’re newer, smaller mining companies with a limited history and typically operate with minimal capital. The goal is to pick the right junior mining company to invest in when stock prices are low with the hopes of seeing significant returns in the future.
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Best Mining Stocks In Canada
The following are some of the top mining stocks from Canadian companies:
Canadian Mining Stock | Market Cap | Exchange |
Barrick Gold Corp. (ABX:TSE) | $46.7 billion | Toronto Stock Exchange |
Sterling Metals Corp. (SAG:TSXV) | $12.80 million | TSX Venture |
Prime Mining Company (PRYM:TSXV) | $335.83 million | TSX Venture |
First Quantum Minerals Ltd. (FM:TSE) | $26.537 billion | Toronto Stock Exchange |
American Lithium (LI:TSXV) | $678.01 million | TSX Venture |
Cabral Gold (CBR:TSXV) | $56.61 million | TSX Venture |
Barrick Gold Corp. (ABX:TSE)
Barrick Gold is based in Toronto and is mainly involved in the production of gold and copper. It explores, develops, and mines precious metals throughout North America, South America, Africa, Papua New Guinea, and Saudi Arabia.
- Market Cap: $46.7 billion
- Exchange: Toronto Stock Exchange
Sterling Metals Corp. (SAG:TSXV)
Sterling Metals is a mining company focused primarily on exploration opportunities throughout Canada. The company is currently exploring silver and base metal sources at its Sail Pond project in Northwestern Newfoundland.
- Market Cap: $12.80 million
- Exchange: TSX Venture
Prime Mining Company (PRYM:TSXV)
Prime Mining Corporation is a Vancouver-based mineral resource acquisition, exploration, and development company that is currently mining for gold and silver in Mexico. The company is currently focused on the Los Reyes project covering over 13,800 hectares of land in Sinaloa, Mexico.
- Market Cap: $335.83 million
- Exchange: TSX Venture
First Quantum Minerals Ltd. (FM:TSE)
First Quantum Minerals is a Vancouver-based mining and metals company involved in exploration, development, and mining and produces gold, copper, nickel, zinc, and cobalt. The firm has mining operations in Latin America, Africa, and Australia.
- Market Cap: $26.537 billion
- Exchange: Toronto Stock Exchange
American Lithium (LI:TSXV)
American Lithium is headquartered in Vancouver and was founded in 1974. It is an exploration mining company involved in the acquisition, exploration, and development of lithium resources in the US. The company provides infrastructure services needed to process the metal and is poised for rapid growth thanks to its partnerships with governments for new drilling sites.
- Market Cap: $678.01 million
- Exchange: TSX Venture
Cabral Gold (CBR:TSXV)
Cabral Gold is a Vancouver-based junior resources company that explores and develops gold and copper primarily in Brazil. It currently is focused on the development of the Cuiú Cuiú project which spans over 41,500 hectares in the Tapajos region. Though considered a junior company, Cabral Gold has received many public offerings to help raise capital through the TSX.
- Market Cap: $56.61 million
- Exchange: TSX Venture
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Best Mining ETFs In Canada
If buying a whole stock is too much risk, you can consider investing in precious metal mining exchange-traded funds (ETFs). An ETF is a basket of securities, such as stocks and bonds that tracks an underlying index. They are typically less risky than a single stock due to its diversified assets. The following are some of the best mining ETFs in Canada to consider:
Canadian Mining ETFs | Risk Rating |
iShares Gold Bullion ETF (CGL:TSE) | Medium to high |
iShares S&P/TSX Global Gold Index ETF (XGD:TSE) | High |
Horizons Gold Yield ETF (HGY:TSE) | Medium |
BMO Equal Weight Global Gold Index ETF (ZGD:TSE) | High |
iShares Gold Bullion ETF (CGL:TSE)
iShares Gold Bullion ETF invests directly in physical gold and seeks to duplicate the performance of the price of gold bullion, minus fees and expenses. It is eligible for registered and non-registered accounts.
iShares S&P/TSX Global Gold Index ETF (XGD:TSE)
iShares S&P/TSX Global Gold Index ETF is invested in 10 gold mining firms, including Barrick Gold, Newmont, and Wheaton Precious Metals Corporation. The ETF has more than 50 companies in its portfolio, offering investors plenty of diversification, and has holdings in Canada, the US, South Africa, and Peru. It is eligible for both registered and non-registered investment accounts.
Horizons Gold Yield ETF (HGY:TSE)
Horizons Gold Yield ETF offers investors exposure to gold bullion hedged to the Canadian dollar, minus fees and expenses. The ETF minimizes risk and generates income through its active management strategy. It is eligible for registered and non-registered accounts, and dividends are paid out on a monthly basis.
BMO Equal Weight Global Gold Index ETF (ZGD:TSE)
BMO Equal Weight Global Gold Index ETF tracks the Solactive Equal Weight Global Gold Index and with the goal to mimic its performance by investing in gold mining equities. The ETF holds 35 gold mining stocks, including Wesdome Gold Mines, Kinross Gold, and Franco Nevada. Most of its stock holdings are in Canada, the US, and South Africa. It is eligible for registered and non-registered investment accounts.
Benefits Of Investing In Mining Stocks
There are a few unique perks to investing in mining stocks that might make this industry an attractive one for you to invest in:
- Long History. Mining is a well-established industry that has developed familiar trends and patterns over the years, allowing for more accurate forecasting and speculation when the economy is healthy. Not only is this good for major mining companies, but juniors, too.
- Potential For Great Profit. There’s a finite supply of minerals in the earth. As the supply of minerals depletes, the opportunity for profit grows. And with a growing global population, the demand for natural resources increases.
- Various Risk Levels. Whether you have an appetite for risk or are more of a conservative investor, mining stocks have something for everyone. As mentioned, mining companies are classified as either major or junior, both of which come with their own risk level. You can match your investment strategy easily with different types of mining companies.
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Risks Of Investing In Mining Stocks
While there are some advantages to investing in mining stocks, there are also a few drawbacks to consider:
- Potentially Complex Mining Process. The process of mining can sometimes be complicated, especially for newbie mining stock investors. This can make it hard to research and understand which mining company is worth investing in.
- Vulnerable To Political Regulations. Depending on where specific mines are located in the world, mining companies are at the mercy of political regulations in those particular areas. The location of a mine can have a significant effect on the profitability of a mining company, since the political situation of the country where the mine is located can impact material prices and mining processes.
- Volatility. Junior mining companies come with much more risk given the short history and limited company profiles available for investors to study. Since there are hundreds of junior mining companies listed on exchanges all over the world, many are likely to fail shortly after starting. If you pick the wrong one, you could risk losing your investment capital.
Mining Stocks: Growth Or Value Stocks?
Mining stocks can either be growth or value stocks.
Growth stocks are from companies that have the potential to perform very well compared to the overall market over time.
Junior mining stocks are classified as growth stocks because they’re still in the early stages of mining, making them higher-risk stocks. However, they offer a great opportunity for significant returns as a result.
Value stocks are companies that are presently trading for less than what they’re truly worth and will provide an excellent return.
Major mining stocks are considered value stocks because they’re companies that have already been long-established in the industry. This presents investors with less risk.
Mining Stocks FAQs
Can you get dividends through mining stocks?
Can I buy gold mining stocks?
Should you invest in mining stocks?
Final Thoughts
Mining stocks can be a potentially lucrative investment if you do your homework and invest wisely. These types of investment vehicles can provide steady returns and provide long-term wealth-building opportunities while diversifying your investment portfolio.