How to Screen Mining Stocks in a Bull Market, Rule by Rule

Most investors assume the fastest way to profit from a precious metals rally is to buy the smallest, most speculative explorers. Don Durrett, a long-time gold and silver stock analyst, takes the opposite view: he regards roughly 95% of explorers as not worth owning, even in a mining stocks bull market where metal prices have room to run.

That tension matters right now. Spot gold sits near US$4,186/oz and silver near US$60.5/oz as of 13 October 2026, well below the price scenarios Durrett uses to value miners. If he is even partly right, the gap between today’s prices and his targets is where the opportunity sits. It is also where the mistakes sit.

Mining shares are leveraged bets on metal prices. That means picking the right company matters more than calling the direction of gold. Durrett’s rules-based screens give you a repeatable way to sort producers, developers and explorers instead of buying on hope.

Here are the thresholds, checklists and warning signs you need to screen each type of miner yourself, and to know when a stock only works if the most optimistic price forecast comes true.

Why miners move more than metal, and why that changes which stage you own

Start with a simple sum. Your miner’s profit per ounce is the metal price minus its all-in cost of producing that ounce. When the price moves, the cost mostly stays put, so the profit moves much further.

• Before: gold at US$2,000, total cost US$1,500, margin US$500
• After: gold at US$3,000, total cost US$1,500, margin US$1,500
• Result: a 50% rise in gold lifts the margin by 200%

This operational leverage is why your miner’s profit can swing far more than the metal itself, because fixed and semi-fixed costs stay in place while the price per ounce moves, and that gap is what you are really buying.

That is the leverage Morningstar’s Nicolò Bragazza described in September 2025: fixed and semi-fixed cost structures turn miners into amplified bets on gold. The industry’s all-in sustaining cost (AISC, the fuller cost of keeping a mine running, including sustaining capital and corporate overheads) climbed from US$1,438/oz in Q4 2024 (World Gold Council) to US$1,785/oz in Q1 2026 and a median near US$1,926/oz by Q2 2026. Costs rose, but bullion rose faster. VanEck reported in August 2026 that this cycle has delivered stronger sustained margin expansion than 2000-2011.

So which type of miner captures that leverage most safely? Durrett’s answer is producers and near-term developers. Explorers, he argues, suit non-bull markets, because a genuine discovery re-rates regardless of metal price. Snowline Gold, Goliath Resources, Collective Mining and Omai Gold all rewarded holders during the recent bear period.

The explorer filter Durrett regards roughly 95% of explorers as not worth owning, partly because they must raise capital over and over across multiple drilling seasons.

The lesson for you: a modest metal rally can multiply cash flow, but only at companies whose costs and balance sheets let that margin reach shareholders.

The producer checklist: five tests before you buy a gold or silver miner

Treat this as an inspection. Each test removes companies from your watchlist, and very few make it to the end.

1. Property quality: low costs, long life, size, manageable capital expenditure, grade, growth potential, location and metallurgy (how easily the metal can be recovered from the rock), ideally with a second property or pipeline.
2. Management: experienced engineers who treat shareholders well and have no history of selling companies cheaply.
3. Balance sheet: large cash, no debt, or debt being paid down quickly.
4. Capital return: a clear commitment to dividends and buybacks once cash reaches about US$1B.
5. Growth and undervaluation: the final screens, followed by a risk-reward synthesis that weighs everything together.

Durrett stresses that growth and undervaluation matter more than current costs. A low-cost mine with no growth can be fully priced. Moneros, planning to lift output from 240,000 to 750,000 oz, and Helio Star, producing about 60,000 oz with a 5x increase planned, show the kind of growth he looks for.

The capital-return rule Durrett wants producers to return at least 50% of free cash flow, ideally all of it, through dividends and buybacks. Kirkland Lake Gold is his model.

Case examples: Lundin, Hecla and Coeur

Lundin Mining is the only current company Durrett says fits that model. In Q2 2026 it bought back 2,202,900 shares for about C$56.2M and declared a dividend of C$0.0275 per share.

Hecla Mining held about US$483M in cash at Q2 2026, redeemed US$263M of senior notes and posted record Q1 free cash flow of US$144M. Yet it fell 50% during the Lucky Friday strike, a reminder that a clean balance sheet does not remove operating risk.

Coeur Mining swung from US$269M net debt to about US$347M net cash, holds roughly US$1.1B, bought back about US$121M of shares through 31 July 2026 and paid its first dividend in 30 years.

Passing the cost test alone is not enough for your money. The multi-year upside sits where balance-sheet strength, shareholder returns and growth meet.

How to value a producer: future free cash flow, multiples and return thresholds

Once a producer survives the checklist, you need a price. Durrett’s method follows a clear sequence.

First, project free cash flow about three years out at future metal prices, treating 12-month price swings as noise. Second, compare the company’s value with that future cash flow and look for a multiple of about 10 or lower. Third, ask how much upside that implies. If a producer cannot offer at least 6-7x, it fails the screen.

The gap between gold’s price path and mining equity valuations is what makes a future cash flow screen useful, since a multiple of 10 or lower only matters if the market is still pricing the margin too cheaply.

His shorthand works as a filter, not a guarantee:

• Producers need at least 6-7x potential; developers 10x or more
• Portfolio target: above 500%
• A 3.5 rating implies a likely 5x; a 4 implies 10x
• A rating of 2.5 or below, or quality of B-minus or lower, is marginal

What the maths can imply Durrett’s illustration: an Avino-type silver company with 8-10M oz at US$200 silver would justify about US$175 per share, against a share price of about US$6.

Now the caution. Durrett’s assumptions are US$7,000 gold and US$200 silver, with a likely raise to US$8,000 gold around January. From today’s spot, gold would need to rise roughly 67% and silver roughly 230%. Some research also describes his models at US$4,000 gold and US$100 silver, with higher stress cases, so check which scenario any target relies on.

The safer habit is to run several price cases. Treat the headline targets as a stress test of upside, and only buy where the stock still works at conservative prices. Past performance does not guarantee future results, and financial projections are subject to market conditions and various risk factors.

Spotting mispriced developers, and the narrow rules for explorers

Developers sit between proof and production. That is where a depressed share price can meet a visible catalyst: the decision to build.

Developer criteria: what must be true

• Seven mandatory checks are passed
• A credible path to production exists
• Insiders own meaningful stock
• Management clearly states and commits to a build plan (Durrett praises Silver Tiger’s Glenn Jessome and La Huntan’s Kimberly)

Durrett treats 10x as the baseline; doubling twice from there gives 40x. La Huntan shows the depressed end. After Victoria Gold’s bankruptcy dragged it down, its market cap fell from about US$18-20M to US$8M, and he bought near two cents, expecting a 100-bagger if it is built. Honey Badger shows the re-rated end, climbing from about US$20M to over US$200M. His Beaver Creek video lists 38 stocks he sees as mispriced, averaging 15x potential.

He wants developers built, not sold. Artemis Gold’s roughly US$427M all-share deal for Vista Gold paid a 29% premium to the 20-day volume-weighted average price and 25% to the 18 September 2026 close. Durrett argues Vista could have been a 25-bagger had it built a 300,000+ oz a year mine. Other premiums have also been modest: about 14% in Gold Fields’ rejected approach to Northern Star, and about 11% in the Regis combination.

Explorer rules: four filters

1. Size: at least 1M oz gold or 20M oz silver, ideally double.
2. Valuation: about 5-10% of spot per ounce in the ground, or US$20-40/oz at US$4,000 gold.
3. Discovery hole: buy only after a real hit, not targets or surface samples.
4. Sell trigger: exit if no follow-up hole arrives after roughly 25-50 more holes.

The 200 gram-metre rule Gram-metres equal grade multiplied by intercept thickness. A hole of 5 g/t over 100 m scores 500. Durrett wants at least 200 before buying.

Snowline Gold fits the template: Durrett bought at about US$30-35M market cap after a first hole near 500 gram-metres, and Valley now hosts 7.94M oz measured and indicated plus 0.89M oz inferred. Freegold, near US$10/oz in the ground, is a useful valuation reference. Even so, Durrett is selling most of his explorers, keeping Southern Silver as a takeout candidate. These filters exist so you stop paying for hope.

What can go wrong: risks that break the framework

Every strong thesis above can fail through a specific mechanism. Knowing which one helps you size positions sensibly.

Jurisdiction adds royalties, taxes and permitting risk. Valuation multiples can also compress, so higher free cash flow may not deliver the return you modelled.

A royalty surge and margin compression among unhedged producers show how quickly jurisdictional costs can erode the leverage a bull market promises, particularly for companies clustered near the sector AISC benchmark.

The extreme-price case carries its own trap. At US$7,000 gold, cost inflation, windfall taxes and lower multiples become more likely, eroding the very upside the forecast promises. BMO’s December 2024 positioning favoured stable low-cost producers and demanded evidence of cost control and capital discipline.

Before you buy, test:

• Balance sheet and mine life
• Jurisdiction and royalties
• Sustaining capital and grade
• Dilution and fully diluted share count
• Hedging and reclamation liabilities
• Management’s execution record

Buying miners only because gold is going higher is not a strategy. Each position should survive a conservative price case and a fully diluted share count.

Building a miner portfolio that works if the price targets never arrive

The priorities run in order. Lead with low-cost producers that generate visible free cash flow, carry strong balance sheets and return capital. Add advanced developers whose economics hold at conservative prices and whose management is committed to building.

Own explorers only after a qualifying discovery hole and at a low per-ounce valuation. Treat US$7,000 gold and US$200 silver as optionality on top of a sound base case, never as the base case itself.

Your next step is practical: run the five-point checklist and the pre-purchase tests across your current holdings this week. Then watch for the more aggressive takeovers Durrett expects later in the cycle, since higher premiums would signal that boards are finally pricing in the margins you can already see.

Investors weighing equities against metal will find our full explainer on gold miners versus bullion, which compares full-cycle returns across both approaches.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Forward-looking statements are speculative and subject to change based on market developments and company performance.

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