Let’s look at the list of the miners with market capitalization over $700 mln. I want to buy a company that makes money on its business. I would sort out all the companies with Operation Margin of less than 20%. The best companies produce Free Cash Flow, meaning that they earn so much money so they profit after paying taxes and interest on debt exceeds capital expenditures and debt repayment. Companies with free cash flow add value to their shareholders on a daily basis!

Out of the list below we have several miners that produce Free Cash Flow: NEM, BTG, GOLD, FSM, RGLD. I would add to that short list two more companies, AUY and FNV. They have the highest Operating margin in the sector and the only reason why they do not have free cash flow is because they use profit to finance their capital expenditures.