January 14th, 2022 | 12:31 CET
Barrick Gold, Alerio Gold, First Majestic - Experts agree: 2022 will be the year of mining stocks
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"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
Barrick Gold - Can shareholders finally cheer?
Even if the share price of Barrick Gold has suffered terribly in the past 17 months, shareholders could at least rely on one thing: The Group would continue to cut its all-in costs and thus greatly expand its cash generation. In Q3, the Group reported a new low in all-in production costs: USD 1,034 per ounce. That is a far cry from the current gold price, around USD 1,800 per ounce, and illustrates why a nearly 50% drop in the price has even industry experts puzzled. Even if a gloomy Bloomberg survey of the gold price turns out to be accurate and drops to USD 1,683 per ounce in the short term, Barrick could still earn a nice margin.
Shareholders are now eagerly looking ahead to January 19, as that is the day the Group will announce its preliminary figures for Q4 and full-year business performance. The final figures will be published on February 16. We expect the Group to be virtually debt-free by now and build up a net cash position in the current year. Shareholders will very likely again be in for a special dividend. That should give the starting signal for a renewed price increase. Analysts also expect this, and all of them recommend the share as a buy. The price potential of the consensus estimate is a whopping 40%.
Alerio Gold - Promising gold explorer
Guyana is one of those countries that many people have trouble locating. There is often confusion with French Guiana or Guinea. While the latter is a state in West Africa, Guyana and French Guiana are not that far apart. Both are located in the northeast of South America and are separated only by the state of Suriname. But Guyana also has something in common with its West African namesake: both are rich in similar mineral resources, notably bauxite, diamonds and gold. This is not surprising because both continents were once connected at precisely this point before the continental drift in the great prehistoric continent of Gondwana.
The Canadian junior explorer Alerio Gold is engaged in exploring gold in Guyana. The Company, which has also been listed on the Frankfurt Stock Exchange since November 22, 2021, is currently developing two gold projects in Guyana, in each of which it holds a 100% interest: Tassawinni/Sonne and Harpy. Significant investments of approximately CAD 34 million have already been made to develop and construct the Tassawinni/Sonne project. According to a study conducted in 2009, the project has resources of approximately 499,000 ounces of gold (indicated and inferred). It is well equipped in terms of infrastructure with an airstrip and a jetty. The relevant mining licenses for the projects are also already in place.
Accordingly, the Company has set its sights high for the new year. The exploration program is expected to progress significantly, and the Company anticipates a further increase in resources. In addition to obtaining an environmental impact statement, the Company plans to publish a PEA (preliminary economic analysis) study. Currently, the market capitalization is just CAD 17 million. For risk-averse investors, this is a very interesting opportunity to be part of an already advanced junior project.
First Majestic Silver - Economic recovery should pay off
The Canadian silver and gold producer has wisely used the crisis year 2021 for decisive course settings to be able to fully take off again in 2022. In the face of falling silver prices due to a decline in demand from the industry because of corona-related disruptions in the supply chains, the Company has completely stopped selling its silver production.
In addition, given the lack of worthwhile silver projects, First Majestic took advantage of an opportunity that presented itself to acquire a high-production gold project in Nevada with further upside potential. Last but not least, the Company was able to refinance an existing bond on the capital market at a favorable price by issuing a convertible bond. Several factors should give First Majestic's stock a boost again in 2022. Analysts appear to see it that way, too, giving the share an average upside potential of around 30%.
Normalizing supply chains and high inflation rates will undoubtedly cause prices for precious metals to rise in 2022. There is no plausible explanation for further declines. If you want to play it safe here, look at the papers of heavyweights like Barrick or First Majestic. Alerio Gold is a promising gold explorer where significant project progress can be expected in 2022.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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