16. November 2021 | 11:34 CET
Barrick, Barsele Minerals, Agnico Eagle, Yamana - Trading the gold explosion to USD 2,500!
Minneapolis Fed President Neel Kashkari announced last weekend that high inflation could persist in the coming months, and yet the Fed should not overreact; after all, inflation will pass again. As you can see, central bankers on both sides of the Atlantic never tire of repeating this thesis to us investors. One tends to listen carefully because the same monetary watchdogs tried to conjure up a "wishful inflation" of over 2% a few years ago. A stage goal has certainly been reached with a 4% increase in price! What is the future for precious metals in this environment?
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ISIN: BARRICK GOLD CORP. | CA0679011084 , BARSELE MINERALS | CA0688921083 , AGNICO EAGLE MINES LTD. | CA0084741085 , YAMANA GOLD INC. | CA98462Y1007
"[...] 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.
Barrick Gold - Current mergers pass the gold giant by
In the last upward movement of the precious metals, many investors look at the blockbuster concerns such as Barrick, Newmont, Freeport or Agnico Eagle. For a long time, the question was: What are the gold companies waiting for in terms of takeovers because the coffers should be well filled due to the high spot prices. However, things have been going at a rapid pace for a few weeks now. Another blockbuster deal followed the takeover of Kirkland Lake Gold by Agnico Eagle.
The Australian gold producer Newcrest is making a move for Pretium. The deal cost Newcrest CAD 3.5 billion - a sum last spent in 2007.
With this, the next large producing gold mine in Canada is going over the bar. The Brucejack mine last produced around 350,000 to 400,000 ounces annually. However, the mine is considered one of the most controversial projects in Canada. Some geologists believe that the nugget effect distorts the drilling and ultimately the Resource, and in fact, Pretium's quarterly results have fluctuated significantly recently.
The interesting thing is that the major North American producers are only spectators on the sidelines. Neither Newmont nor Barrick Gold was able to announce any major acquisitions recently. Particularly in the case of Barrick Gold, this is surprising since CEO Mark Bristow had announced that Barrick needed significantly more mines in North America. However, both Kirkland Lake and Pretium were not taken up by the North Americans. In the current market, these were the two largest producing Canadian mines behind Canadian Malartic. Agnico and Yamana own this project in a 50/50 joint venture.
Currently, Barrick Gold is said to be interested in Great Bear. This project currently costs CAD 1.25 billion and has doubled in the last 2 months alone. But even if that is true, Great Bear is certainly still more than 5 years away from production. Investors in Barrick stock are starting to get impatient. That could also explain the relatively weak share price in recent months. While other mines could gain up to 80%, Barrick bobs back and forth between CAD 23 and 26. In Euro terms, Barrick is down 17% on a 52-week basis. It makes sense to take a closer look here in the coming weeks.
Barsele Minerals - Continuation of cooperation with Agnico Eagle in Sweden
For years, Sweden has been an excellent location for mining companies. That puts the Scandinavians in a good position in the international race for critical metals, as the deposits of metals and energy sources are outstanding compared to Europe, which is poor in raw materials. For years, the Swedish government has been very cooperative with the mining industry. That also enables smaller raw material companies like the Canadian Barsele Minerals to push ahead with corresponding exploration projects.
The Company's current project is located in the mining region of Västerbottens Län in northern Sweden, 600 km north of Stockholm, and covers 33,500 hectares in the Fennoscandian Shield. The zone of interest is located at the western end of the Proterozoic "Skellefte Trend", a prolific belt of volcanogenic massive sulfide deposits that overlaps with the "Gold Line" in northern Sweden. Both polymetallic deposits and intrusive-hosted gold intercepts are present in this region.
Effective September 30, 2021, the Swedish Geological Survey (SGU) has declared the land intercepts of the Avan-Central-Skirasen (CAS) orogenic gold system and the Norra VMS deposit a land and water area of national interest. It covers a size of 685 hectares and, in the future, will impose higher requirements for the public and the relevant planning authorities in project allocation. As the valuable resources and substances have now been classified as nationally valuable, they will in the future be subject to protection against significant interference with nature. That will lead to new and, in some cases, more complex approval procedures for the planned mining activities. Overall, Barsele Minerals regards this as very positive, making access more difficult for unknown competitors.
According to initial estimates, the project has a potential of over 5 million ounces of gold. In addition, the deposit contains recoverable metals such as silver, lead, zinc and nickel. Currently, 45% of the shares are held by Barsele Minerals and 55% by Agnico Eagle. The stock market value of about CAD 78 million is relatively low compared to the dimensions of the deposit. In our opinion, the project will attract very high attention in the current metal price cycle.
Yamana Gold - The mid-tier gold producer is highly interesting
Toronto-based mining Company Yamana produces gold, copper and silver in Canada and South America. In 2003, Canadian investor Peter Marrone acquired the 'old' Yamana for around USD 18 million, which until then had only operated in Argentina and Brazil. The Company then expanded strongly in 2006 with the acquisition of RNC Gold, Desert Sun Mining Corp. and Viceroy Exploration for a combined USD 1.24 billion. Gold production was thus able to exceed the one million ounce mark by 2008. In 2012, the Cerro Moro project in Argentina was purchased from Extorre Gold Mines. Finally, in 2014, Yamana acquired a 50% stake in the Canadian Malartic Mine through a joint venture with Agnico Eagle Mines. Today, Yamana Gold's market capitalization is CAD 5.4 billion.
Recently, Yamana Gold reported results for the third quarter of 2021. While the group continued to increase its operating earnings, total production costs per 256,464 gold equivalent ounces mined decreased YOY from USD 1,096 to USD 1,041 (AISC). Operating profit increased by 8% to USD 154 million. Earnings per share were in line with market estimates at USD 0.07, while revenue was slightly lower at USD 452.2 million. The Company reaffirmed its full-year production target of approximately 1 million gold equivalents. The market did not warm up to the figures, to put it bluntly, with the share coming under considerable pressure after the announcement.
Nevertheless, the Yamana chart is not entirely in the bucket if the EUR 3.50 holds. Currently, the share is relatively stable at EUR 3.94. Should the gold price continue to rebel, even a break of the EUR 4.30 line is to be expected. Then the way would also be free to the old 52-week high at about EUR 5.00. Remain courageously invested in this inflationary environment with a tight stop of EUR 3.50.
High profits are currently being booked in the commodities sector. Industrial metal prices have been rising for some time, and now precious metals are also starting to soar. Agnico Eagle, Barrick and Yamana are major producers, and Barsele Minerals is also sitting on a promising project in Sweden. The realization of this project should soon boost the share price.