12. November 2021 | 10:29 CET
Barrick Gold, Barsele Minerals, Newmont - Inflation protection for own assets
Inflation in the USA continues to rise. While in September it was already 5.4%, in October it reached 6.2%. This figure surprised even the pessimistic experts, who had assumed only 5.8%. The reasons given are energy prices and supply bottlenecks. In Germany, the situation is not much better. The inflation rate was most recently 4.5%. It is said that this inflation is only temporarily so high. But already since Mr. Draghi, it should be clear that the central banks welcome inflation because, in this way, one can let the printing press run longer. As an investor, you should protect your money. Demand for physical gold rose 18% in the third quarter. Alternatively, one can invest in gold companies, of which we analyze three.
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ISIN: BARRICK GOLD CORP. | CA0679011084 , BARSELE MINERALS | CA0688921083 , NEWMONT CORP. DL 1_60 | US6516391066
"[...] Troilus has the potential to be an entire gold belt. All of our work to date points to this, and each drill hole makes the picture we have of the Troilus project much clearer. [...]" Justin Reid, President and CEO, Troilus Gold Corp.
Barrick Gold - Decent quarterly figures
On November 10, the gold price was able to break out of the long distribution phase with the publication of the US consumer price index, which ultimately reflects inflation. Barrick Gold was then also able to break out of its slumber. The Company, which is now increasingly focusing on copper as well as gold, has tried to diversify more. In addition, Barrick is investing in developing new gold deposits to expand its reserves for the future.
Recently, there have been several large acquisitions in the gold sector in North America. The Company has yet to make a move, despite the CEO's desire to acquire more production sites in North America. There are rumors that Barrick Gold is interested in Great Bear. It has not yet been confirmed, and in contrast to the acquisitions mentioned above, Great Bear is not currently producing. It remains to be seen what the Company plans to do. However, investors are starting to get impatient.
On November 4, Barrick presented its third-quarter numbers. It produced 1.09 million ounces of gold and 100 million pounds of copper. Earnings were USD 0.20 per share. So the balance sheet looks good, and the Company is looking for acquisition targets. Since the quarterly numbers, the stock has been rallying. There was even a gap-up with the breakout of the gold price. Market reports speak of pent-up demand for the value and it currently looks like the share could continue to rise.
Barsele Minerals - Realigns itself
The Canadian gold explorer Barsele Minerals holds a 45% stake in the Barsele Project, located in the mining region of Västerbottens Län, northern Sweden. Gold deposits of approximately 2.4 million ounces have already been proven in 2019, according to an NI 43-101 report. The area is 33,500 hectares in size and has been studied in more detail by partner Agnico Eagle in recent years. In May, the Company sought to buy out Agnico Eagle's 55% interest, and a letter of intent was signed.
On November 1, the Company announced that the acquisition of the Agnico Eagle shares had fallen through due to current market conditions. CEO Gary Cope is "looking forward to continuing the joint venture with Agnico Eagle on the Barsele project," according to a company commentary. So things are continuing in the current constellation. On November 10, good news was reported. The Swedish Geological Survey has classified an area of 685 hectares, including parts of the Barsele project, as an area of national interest. As a result, future permitting procedures will be simplified.
The stock, which had fallen from 0.61 Canadian dollars (CAD) to CAD 0.50 after the failed acquisition, recovered much of its losses with the November 10 announcement and is currently trading at CAD 0.57. From this, one can see that the Company has a strong shareholder structure. 60% is held by institutional investors, 25% by management. The market capitalization is currently around CAD 74 million. If you compare that to the gold deposits worth about USD 600 million at the current gold price, you can better gauge the potential.
Newmont - Analysts disappointed
Newmont, the largest gold producer globally, presented its third-quarter figures on October 28, which disappointed analysts. Instead of achieving USD 0.73 per share profit as expected, only USD 0.60 was achieved. The reason is the significant increase in production costs, which rose from USD 830 to USD 1,120. Produced were 1.45 million ounces of gold, as well as 315,000 ounces of gold equivalent. Problems were caused by the Nevada Gold Mines joint venture, which had to deal with production disruptions. In Australia, the Corona pandemic is weighing on production.
In the course of the figures, the Company revised its annual forecast. Instead of 6.5 million ounces of gold in 2021, it is now expected to be only 6 million ounces at USD 1,050. On November 10, the Company announced a strategic collaboration with Caterpillar. The Company aims to work with its partner to develop a connected, automated and zero-carbon mining system to boost its carbon footprint. It plans to produce 26 autonomous electric vehicles by 2027.
Newmont's stock dipped after the numbers were announced, despite a USD 0.55 dividend for the quarter. It was only after the good Barrick Gold figures that Newmont's stock also started to rise again and was able to close the price gap that its own quarterly figures had opened up. The share is preparing to break its downtrend due to the breakout of the gold price on Wednesday.
With the breakout to the upside from gold's distribution zone, shares of all gold producers jumped immediately. Barrick Gold impressed with its quarterly results and is looking for takeover targets. Barsele Minerals has gold in its project area but is only now on the way to becoming a gold producer. Newmont disappointed investors with its quarterly figures, but a rising gold price automatically moves the shares of the largest gold producer upwards.