With the gold market in the doldrums over the past year, even the highest-quality mining operations have seen their share prices plummet, given that they’re extremely leveraged to the spot price of the metal.

As a result, even stalwarts such as Metals and Mining Portfolio holdings Goldcorp (NYSE: GG), New Gold (AMEX: NGD) and Newcrest Mining (ASX: NCM, OTC: NCMGF) are trading at hefty discounts to my current buy targets.

However, little has changed operationally at those miners, with each meeting their 2012 targets. The only real deviation at any of them was an increase in production costs at Goldcorp, due to operational issues at its Red Lake and Penasquito properties, but those problems seem to be well in hand.

All three have issued more conservative production guidance for 2013, largely due to lower prevailing gold prices, but each could quickly ramp up production in the event of an improved gold price outlook.

Continue buying all three miners below their buy targets listed in the Metals and Mining Portfolio table.

In addition to those three, I’m adding an additional miner to our portfolio.

A mid-tier gold miner, Eldorado Gold Corp (NYSE: EGO) is arguably one of the best miners in the business.
Engaged in the exploration, development and production of gold, Eldorado operates one mine in Brazil, three in China, two in Greece and two in Turkey. It also happens to be the only Western gold miner with a secure foothold in China, the world’s largest gold producing country. It currently has one mine under construction in Greece with another four properties under development, including one in Romania.

One of Eldorado’s most attractive attributes is its extremely low cost of production, which averaged $489 per ounce of gold last year on production of about 660,000 ounces last year. Compared to an industry average of about $600 per ounce, Eldorado is one of the most efficient gold miners in operation.

In addition, Eldorado currently has no net debt on its books and has grown revenue by an average 56 percent over the past three years, while earnings have grown by 8 percent versus an average loss for the rest of the industry over that period. The miner also enjoys a net margin of 25.4 percent, more than twice the industry average.

Despite it’s stronger than average fundamentals, Eldorado hasn’t been getting much respect from the market and its shares are off by nearly 25 percent so far this year.

Higher than expected cash cost of production last year is one contributing factor to that decline, with $489/oz coming in slighter higher than anticipated.

Lower-than-expected 2013 guidance also had an impact; management has forecast production of between 705,000 to 760,000 ounces this year at a cost of about $487/oz.

But even at management’s lower-than-expected figures, Eldorado will still outgrow its competitors at a below-average cost if it meets its goals for this year. The company also has a history of beating both its own and analysts’ estimates on an extremely consistent basis, so its current guidance is more about managing market expectations in a weak market environment than any developing weakness in its business.

While it’s a strong operator now, the company’s terrific growth potential is an even better reason to buy the stock.

Based on Eldorado’s proven and probable reserves at both its operating mines and its properties under development, it is on track to produce around 1.5 million ounces of gold by 2016, helped along by its Eastern Dragon property in China, which should begin production in the next few months.

By that time management expects to reach its peak production target, it aims to have its production costs down to between $300 and $350/oz, which will provide a nice boost to both operating and net profit margins even if the spot price of gold were to continue pulling back from here.

But if gold prices improve over the course of 2013 as I expect, Eldorado should really take off over the next two years.

Eldorado Gold Corp, the newest addition to our Metals & Mining Portfolio, rates a buy under 12.