With prices remaining so volatile across the sector, I decided yesterday to try to reduce risk in the portfolio by including a few more stocks with stronger balance sheets. In addition to adding to my position in Capital Drilling (9000 shares at 23.9p), I have also added:

• Gem Diamonds (2000 at 102p – will look to top up). The Q3 update yesterday looked solid particularly on pricing. The company has net cash on the balance sheet and is cash flow positive after capex (despite Gaghoo still not operating at full steam) and pays a dividend.
• Fresnillo (800 at average price of 689p). Low gearing and makes money even at current silver prices. Modest dividend.
• Centamin (8000 at average price of 61p). Significant net cash on the balance sheet and cash flow generative at current prices (Q3 AISC of US$918/oz). Following Q3 results, Centamin looks on track to meet this year’s guidance (in contrast to last year’s disappointment) although that does require an  improvement in the opencast grade in Q4. Egyptian/legal risk remains in the background but as a result shares trade on low multiples relative to the gold sector.