Mega gold producer Newmont Mining (NEM) reported 2nd quarter results today which narrowly surpassed consensus estimates while raising 2014 production guidance. From our perch the most interesting part of the report came in the form of slide #9 from NEM's earnings release presentation:

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Newmont_Slide_7.30.2014

This is an important slide because it shows that Newmont is committed to keeping costs in check while increasing production. The recent trend of cost containment is in stark contrast to the past decade in which senior gold producers went wild with SG&A and cap-ex expenditures.

In the event that the gold price were to resume its long term uptrend during the coming months, it is far from unreasonable to foresee many of the senior producers doubling from current share price levels during the next 12-18 months. Investors are beginning to become aware of the considerable operating leverage embedded in many of the senior producers and have slowly begun to crawl back into the gold mining sector.

The NEM chart is a perfect example of the upside potential that exists in many of the senior gold producers from current levels:

NEM_Daily_7.30.2014

Above $26.50 it could be a quick trip into the $30s for NEM

Present valuations in the gold mining space are compelling, especially if the trend of cost containment & rising production becomes combined with a backdrop of rising gold prices.

Also: Newmont Plans $1 Billion Suriname Gold Mine to Cut CostsBloomberg