23. October 2020 | 14:24 CET
Agnico Eagle Mines, Kinross Gold, Newlox Gold: Gold in vogue again!
When markets are particularly volatile, as they were, investors often turn to precious metals because they promise stability and value retention. For hundreds of years, gold has been one of the most valuable metals for the protection of assets. Because of its intrinsic value, gold is generally less volatile than the market as a whole. In short, gold can be a useful way to cushion speculative turns on the stock market. So the Portfolio Theory!
The diversification of your own portfolio with precious metal investments is a favored trading method. Since March, the gold price has risen continuously until summer. At the beginning of August, the gold price reached a new all-time high of around USD 2,000 per ounce. A large number of commodity analysts, however, have stated that the value of gold still holds considerable surprises until 2025, making gold mines a perfect vehicle to profit from this trend.
time to read: 3 minutes by André Will-Laudien
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Agnico-Eagle Mines - Dividend gold-plated
Agnico Eagle-Mines has an illustrious history in the mining industry, and its name still refers to its diversified portfolio of different activities. The name Agnico derives from the symbols for the chemical elements silver (Ag), nickel (Ni), and cobalt (Co). The merger of Agnico with Eagle Gold in the early 1970s gave the Company its current identity and a robust mix of metals for mining and processing. Agnico Eagle currently operates eight mines in Canada, Finland, and Mexico. One of its main assets is its 50/50 joint venture interest in the Canadian Malartic open-pit gold mine, which is the largest in Canada.
Agnico Eagle's shareholders benefit from one of the longest track records in the industry, with payouts increasing regularly. Dividends pose a particular challenge for many gold mines, as the capital expenditures required for mining tend to make it difficult for companies to return anything to shareholders. However, Agnico has been distributing approx. 1.2% returns for years. The Company currently has a market value of EUR 18.2 billion, and the share price has increased by approx. 80% in the last 3 years.
Kinross Gold - gold nugget ahead
Another titan in the industry is Toronto-based Kinross Gold Corp, one of many gold mine operators based in Canada. Kinross Gold's current projects do not include Canadian sites. In addition to exploration sites in Chile and the USA, Kinross Gold is also active in Brazil, Russia, and West African nations such as Mauritania and Ghana.
With its broad portfolio, Kinross has ambitious plans for the future. The Company expects to produce approximately 2.5 million ounces of gold annually, with total production costs of less than USD 1,000 per ounce. More than half of its total production is expected from its operations in the Western Hemisphere, with between 20% and 25% each from West Africa and Russia. Kinross currently has a market capitalization of EUR 9.5 billion, and its shares are among the 10 largest and most liquid gold stocks in the world.
On October 20, 2020, CEO J. Paul Rollinson announced: "Our growing production profile and declining cost trend over the next three years are expected to drive strong free cash flow performance, placing Kinross in an excellent position to generate substantial value for our shareholders. Furthermore, our positive long-term production outlook, with estimated average annual production of 2.5 million AuEq ounces to 2029, provides a solid foundation to continue building value into the future." That's a promising announcement which we will review in due course.
Newlox Gold - Gold the clean way
Newlox Gold Ventures Corp. produces gold through environmental remediation by recovering precious metal residues and impurities from historical tailings. These gold-bearing residues are the result of more than a century of inefficient artisanal and small scale mining in Latin America, with less than half of the gold content recovered from the mines. Thanks to the Company's novel, environmentally friendly process, Newlox can secure access to over 30 historic gold projects through local governments. Newlox Gold is in a steady position to now rapidly increase gold production in Costa Rica and to act as a local environment friendly sponsor.
Newlox Gold's unique approach eliminates the conventional time and capital intensive process of exploration, permitting, and subsequent gold mining. From this perspective, Newlox could become an ideal takeover candidate for larger players in the gold business when it is evident by early next year how efficient the developed processes are and how large the deposits are.
On October 15, 2020, the Company announced an up-to-date overview of the tests carried out with Organic Aqua Regia (OAR) in Newlox's recently established research and development laboratory. The Company is researching the technology as a non-toxic and anhydrous alternative to the use of cyanide in the production of gold and other precious metals. Recent OAR tests have shown gold recoveries of over 90% at room temperature and pressure, which is unique in gold production. The speculative value has a capitalization of just under CAD 15 million - a solid entry-level for a more sustainable approach, we believe.