One means of gaining exposure to the gold price is via miners. Their profitability is clearly impacted by the price of gold. With that in mind, here are two gold miners that could be worth a closer look.

Operations update

Releasing an operational update on Wednesday was South American-focused gold and silver miner Patagonia Gold (LSE: PDG). The company reported that its total production for 2017 was 26,005 gold equivalent ounces. This was marginally higher than 2016’s figure of 25,800 gold equivalent ounces.

Monthly production continues to ramp up at Cap Oeste, with it scheduled to exceed 4,200 gold equivalent ounces in February. Cash costs remain relatively competitive, with them standing at $711 per gold equivalent ounce. With the company’s production guidance for 2018 being 59,000 gold equivalent ounces, it is anticipating a significant increase in production. This has the potential to strengthen its financial position and could help it to deliver improved share price performance.

Certainly, Patagonia Gold is a small and risky miner. If the price of gold moves downwards then it could lead to challenges for the company and for its investors. However, with its operational performance continuing to improve according to Wednesday’s update, it could be worthy of a closer look for less risk-averse investors.

Total return prospects

Also worth a closer look within the gold mining sector is Polymetal (LSE: POLY). The Russia-focused company has experienced a difficult year, with its share price falling by 20% as investor sentiment towards such miners has waned.

Looking ahead, the business is expected to report a rise in its bottom line of 16% in the current year, followed by further growth of 20% next year. This suggests that with gold continuing to post gains in recent months, the prospects for the industry remain relatively positive. And with investor sentiment being somewhat subdued, it means that the stock has a price-to-earnings growth (PEG) ratio of just 0.4 at the present time. This suggests that it offers a wide margin of safety and could deliver capital growth over the medium term.

In addition, Polymetal also offers a relatively high income return. The stock has a dividend yield of 5.3% for the current year, which is due to move up to 6.3% in 2019. Despite such a high dividend yield, its payouts are expected to be covered 1.9 times by profit. This suggests that they are highly sustainable and could mean that further dividend growth is ahead over the coming years.

The post 2 stocks to invest £500 in for the long term? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Production of gold in the first quarter of the current year was 4% down on the comparable quarter from a year ago. But this was due to an expected grade decline at the company’s mature Okhotsk operations, a one-off release of work in progress at Voro in the same period last year and processing of lower grade stockpiles at Varvara.

Encouragingly, all other operations had strong performances and looking ahead, Polymetal is forecast to increase its bottom line by 45% in the current year. This puts its shares on a price-to-earnings-growth (PEG) ratio of just 0.3, which indicates that they’re set to continue the 17% gains recorded since the turn of the year. And while Polymetal is a relatively risky stock that’s highly dependent on the prices of gold and silver for its profitability, its margin of safety appears to be sufficiently wide to merit investment.

Revenue fall

Also reporting today was gold and silver miner Patagonia Gold (LSE: PGD), with its shares having fallen by 11% at the time of writing. Despite the company achieving cost savings of $1m during the 2015 financial year, they were insufficient to offset a fall in revenue from $35.9m in 2014 to $26.1m in 2015. The reason for the fall in revenue was lower production as well as a lower gold price.

With Patagonia Gold’s only producing asset set to end production in the next year, it’s seeking to develop new assets to improve on its current financial performance. Clearly, this brings a degree of uncertainty. While the company has the potential to deliver improved revenue and profitability over the medium-to-long term, with a number of highly profitable precious metals miners trading on very enticing valuations, there may be better options for investment available elsewhere.

Risky but rewarding

Meanwhile, BHP Billiton (LSE: BLT) continues to offer a highly enticing risk/reward ratio, with the mining major set to begin a recovery in the next financial year. In fact, its earnings per share are forecast to more than treble next year and this has the potential to significantly improve investor sentiment in the diversified resources play. Evidence of the potential for this can be seen in BHP Billiton’s share price performance in the last three months, with it having risen by a whopping 46%.

Clearly, BHP Billiton isn’t without risk and a major downturn in the price of iron ore or other commodities could severely dampen its outlook. However, with the business being much stronger than it previously was due to efficiencies being made and non-core assets having been spun-off, BHP Billiton seems to have a wide margin of safety and could be a superb performer in the coming years.

The post Are BHP Billiton plc, Polymetal International PLC And Patagonia Gold plc ‘Screaming Buys’? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Peter Stephens owns shares of BHP Billiton. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.