November 1st, 2021 | 12:50 CET
Barrick Gold, Central African Gold, Gazprom - Gold becomes a fireball!
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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 - Newmont drags down the industry
A major industry player with 200 tons of annual production and 14 active mines is Canadian mining giant Barrick Gold, based in Toronto. The precious metals miner's business activities include the production and sale of gold and copper, as well as capacity-renewing exploration activities. Optimizing the operational set-up naturally includes regular mine closures. About 90% of sales in 2021 will come from the precious metal gold and 8% from the industrial metal copper.
Last week, the share price of Barrick Gold went into reverse, which many would probably have imagined differently. Unfortunately, the world's second-largest gold producer is not having a good run on the stock market at the moment. However, the weakness within all gold shares was due to the figures presented for the third quarter of the number one: Newmont Mining. These turned out to be anything but good, as adjusted earnings for the third quarter were only USD 0.60, USD 0.13 lower than analysts' consensus estimate. Using US GAAP, there was even a small loss of USD 0.01 per share. Newmont also significantly lowered its guidance to 6 million ounces of production.
Now, expectations for Barrick Gold's upcoming numbers are also subdued. The Canadians will report next Thursday, November 4. The share price has already taken a dive at EUR 15.9 and has now lost a complete 23% within 5 months. Analytically, the Barrick share is now trading at a 2022 P/E ratio of 13, and of the current 24 analysts, 16 recommend entry. We are currently looking at the EUR 15.5 line from a chart perspective because a fall below this mark threatens trouble. Therefore, continue to observe only from the sidelines!
Central African Gold - Cancellation for the Zani Kodo project
For years, the Democratic Republic of Congo (DRC) in Central Africa has been a sought-after commodity industry location. The former colony of Belgium under the name of Zaire is today abbreviated as Congo and is the second largest state in Africa in terms of area, behind Algeria. The country is crossed by the equator and has a tropical climate throughout. The capital, Kinshasa, is considered Africa's third-largest city, with over 13 million people. Despite its wealth of raw materials, the state is one of the poorest countries in the world today due to decades of corruption and wars.
A future employer is currently being created under the name Central African Gold (CAGR). It is a company focused on acquiring, exploring, and developing cobalt and copper mineral properties in the DRC. The concession portfolio, which has grown over 7 years, includes prospective copper, nickel, tin, cobalt, and gold projects. Since its foundation, CAGR has pursued a sustainable corporate policy regarding climate targets and social and corporate governance.
Currently, the team led by CEO Yves Kabongo has terminated the agreement announced in September to acquire an interest in the Zani-Kodo gold project in Ituri Province, following the completion of preliminary due diligence. The Company will focus on its existing projects and explore new expansion opportunities. In doing so, implementing a carbon capture program to earn carbon credits will gradually complement the targeted mining operations.
With a market capitalization of just under CAD 11 million, the Company is not expensive given its good projects. As a future multi-metal supplier, the CAGR share is a good addition for risk-conscious commodity investors.
Gazprom - Price correction of 10% attracts new investors
Another top positioned commodity company from the energy sector is Gazprom PJSC. The Company is the world's largest gas and oil supplier and the most important contract partner for fossil energy supplies to Europe. Since the beginning of the year, German energy prices have increased by 50-70% in oil products and 200-500% in gas products.
Russian President Vladimir Putin has now ordered a further increase in gas supplies for November to ease the current energy crisis in Europe. He instructed state-owned Gazprom in the middle of last week to significantly increase reserves, specifically to Germany and Austria, as soon as Russia's underground storage facilities are filled. The start for the new supply volumes is to be in the second week of November. Russian state media already celebrated Putin as Europe's savior, but the concession is made based on sharply higher gas prices, which are still up a good 150% since the beginning of the year.
It is a mega-deal for Gazprom since it is, of course, possible to contractually fix the new production volumes at much higher prices. The irrationality in the price structure is the political discussions about the Nord Stream 2 pipeline; the Russian leverage seems to be working. The Gazprom share promptly fell into a corrective movement, losing a full 10% in just 5 trading days. With a dividend yield of 5.5% and a P/E ratio of 8, the energy giant is one of the cheapest commodity stocks on the price list. Medium-term investors are likely to return soon.
Not a good episode for precious metals; again, gold is under chart pressure. For Barrick and Newmont, these are challenging times, but at Central African Gold, the sought-after industrial metals are on board for diversification.
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