Allkem, Triumph Gold, K+S - Take advantage of price setbacks!

Allkem - Price drop after a downgrade by UBS

UBS is one of the best-known and most influential investment banks globally. The word of its analysts carries weight. The strength of this weight can sometimes be seen in the shares of lithium giant Allkem - known as Orocobre and Galaxy Resources, before their merger. The share price has risen by almost 36% to around AUD 11.90 since the end of last year. The Company published its Q4 report only a few days ago, in which all target figures for the quarter were exceeded. Analysts at UBS were convinced that the Company - despite the prospect of an 80% increase in the price of battery-grade lithium carbonate by autumn - had currently exhausted its growth opportunities.

Thus, despite increasing the price target to AUD 11.20, they downgraded the investment recommendation to "Neutral" due to a lack of share price potential. As a result, the share price plummeted to below AUD 10. We do not consider this decline to be justified. Allkem's fundamentals are very good, the growth potential for the lithium market is high. Moreover, starting in 2024, Allkem will commission its 100% owned James Bay lithium project in Québec, Canada, with construction expected to begin this fall. The share is worth considering for longer-term investors after the share price decline.

Triumph Gold - Is the next Yukon gold rush imminent?

On August 16, 1896, a group around "Keish", also known as "Skookum Jim Mason", a member of the "Tagish" people, found gold at the mouth of the Klondike into the Yukon River, triggering the most famous gold rush on the North American continent. The Klondike Gold Rush brought more than a hundred thousand prospectors to the Klondike River near Dawson, led to the establishment of the Yukon Territory, and defined the boundary between Alaska and Canada. The success of the prospectors, known as "stampeders," led to vast quantities of gold on the world market, spurred massive regional inflationary trends, and its demise led to a significant liquidity crisis. In total, some 570 tons of gold have been mined in the Klondike region to date.

The Canadian exploration company Triumph Gold, in which gold giant Newmont holds a 12.1% stake, operates in this area, which is still rich in gold and copper today. Triumph's 100%-owned Freegold Mountain flagship project, located in the Dawson Range copper-gold belt, covers an area of approximately 200 sq km and hosts three deposits, Nucleus, Revenue and Tinta Hill. Triumph Gold owns 100% of the Big Creek and Tad/Toro copper-gold properties near the Freegold Mountain project.

An extensive drill program was initiated last summer, about half of which has been completed to date. Among other things, the Company encountered an intersection over a length of 106.5m with mineralization of 0.76 g/t gold equivalent (AuEq) in the Blue Sky Zone (BSZ). More data can be expected soon with the second half of the drilling program, which has been supported for some time by artificial intelligence to identify promising deposits. The share of the Canadians has lost considerable ground in recent months. Currently, a stock market valuation of only CAD 13 million beckons.

K+S - Share price consolidates at a high level

The Kassel-based fertilizer group reached two critical milestones at the end of 2021. Following the elimination of antitrust concerns, the joint waste management group Reks was successfully established with Remondis. In addition, the Group passed the audit of its valuation allowances by the German Financial Reporting Enforcement Panel with flying colors. The positive share price performance thus continued in 2022. Since the beginning of January, the share has gained a full 25% in the meantime, followed by profit-taking.

The prospects for the stock remain good. Demand and price developments are playing into the hands of the Germans. In addition, the shares are valued very low with a single-digit P/E ratio. Analysts at the private bank Berenberg also see it that way and rate the share as a "buy" with a price target increase to EUR 20.

The high demand for lithium and agricultural raw materials will continue for some time. Allkem and K+S will benefit from this. The factors affecting the price development of precious metals are more complex. However, as a long-term rule of thumb, gold has proven itself as an investment in times of high inflation and great uncertainty. Although higher risk, explorers benefit disproportionately from rising precious metal prices. In addition, Triumph Gold's share price should react positively to project progress.