Close menu




June 7th, 2023 | 09:15 CEST

Barrick Gold, Defiance Silver, and First Majestic Silver - Precious metals in focus after the fall of the debt ceiling

  • Mining
  • Silver
  • Gold
  • PreciousMetals
Photo credits: pixabay.com

The US has decided to suspend its debt ceiling until 2025. The markets reacted happily to this news and marked new highs for the year. But is this decision really a good thing? It took the US over 200 years to reach USD 2 trillion in debt. Now it will add 2 trillion every 18 months. With higher interest rates, refinancing this debt could lead to a financial crisis. Will fiat money still be worth much then? Chances are good that the price of gold and silver will be driven up further in this way. We, therefore, take a look at three gold and silver companies.

time to read: 4 minutes | Author: Armin Schulz
ISIN: BARRICK GOLD CORP. | CA0679011084 , DEFIANCE SILVER CORP. | CA2447672080 , FIRST MAJESTIC SILVER | CA32076V1031

Table of contents:


    Barrick Gold - Buyers are back

    After the gold futures price met resistance at above USD 2,080 and fell back came the quarterly figures from Barrick Gold, which were weaker than expected. The 1st quarter was characterized by lower production and higher costs. Accordingly, there was a year-on-year decline in net profit, revenue and operating cash flow. Nevertheless, the Company remains optimistic for the year's second half and expects improved operating efficiency and higher production figures. Analysts also assume this in their consensus estimates.

    The rapid decline in the share price could attract gold bulls, especially since the Company could also become attractive for investors in the energy transition in the long term due to its copper production. A lot of copper is needed for electrification. The recovery of the Chinese market could also boost the copper price in the short term. The interest in acquisitions could additionally provide a share price boost if the Company announces a suitable takeover target. CEO Mark Bristow said in an interview that they are on the lookout.

    Looking at the share price, the stock is trading at USD 17.19. After 3 weeks, the selling pressure seems to have eased, and buyers have returned. Although Barrick Gold faced challenges in Q1, the Company remains optimistic and expects a better performance in the second half of the year. The planned production increase and optimistic market outlook could provide potential opportunities for investors, especially given the 20% drop in the share price.

    Defiance Silver - Owns large precious metal deposits

    The explorer Defiance Silver owns projects in Mexico. Firstly, there is the gold-copper project called Tepal. The current NI 43-101 resource estimate is for 1.8 million ounces of gold and 813 million pounds of copper. A pre-feasibility study from 2013 is also already available. Legal proceedings are underway as some mineral concessions were transferred to a third party without the Company's knowledge and consent. The flagship San Acacio project is part of the Zacatecas projects, which consist of a total of 4 properties. The state of Zacatecas is the largest silver producer as well as the second largest copper producer in Mexico and has an excellent infrastructure. Active companies in the area include Pan American Silver, Fresnillo, Newmont, Teck, Agnico Eagle and others.

    While the three properties, Lucita, Panuco and Lagartos, are still in an early exploration stage, the main project, San Acacio, can already show an inferred resource of 16.9 million ounces of silver, which is concentrated in only a small part of the project. A total of 44 drill holes with a total length of 10,200 m were drilled, yielding peak values of up to 2,172 g/t silver. A further 20,000 m has been drilled since the last resource update. The property is located on the Veta Grande and Mala Noche vein systems and has the potential for expansion, as shown by the latest drill results from March. Significant amounts of silver were found in all 7 drill holes, with values reaching over 377 g/t of silver at its highest.

    On May 3, Oleg Shcherbyna was appointed CFO of the Company. This added further expertise to the seasoned management team, with decades of exploration experience and a track record of success. On April 1, the Company had CAD 6.5 million in cash and is thus fully funded for the current year. It also allows the final cash payments to be made for the 100% ownership of Lucita and San Acacio. The share is currently quoted at CAD 0.16, bringing the market capitalization to around CAD 36.4 million, which is considered favourable given the existing resources and expansion potential.

    First Majestic Silver - Jerritt Canyon Mine turns into a stumbling block

    First Majestic Silver, a silver producer, posted disappointing Q1 results. According to the Company's recently released quarterly report, silver production fell 2% while gold production rose 3%. Particularly burdening was the temporary suspension of operations at the Jerritt Canyon Mine in Nevada, which resulted in a loss of about USD 93.6 million. Production at the Mexican operations, Santa Elena and San Dimas, developed positively. At San Dimas, 1.6 million ounces of silver and 20,100 ounces of gold were produced, while Santa Elena recorded 104,100 ounces of silver and 24,000 ounces of gold.

    Turnover was USD 157 million. All-in sustaining costs (AISC) increased slightly to USD 20.90 per ounce compared to USD 20.80 per ounce in the same period last year. The Company recorded an operating cash flow of -USD 4.7 million and invested a total of USD 47 million in its operations. At the end of the quarter, the Company had a cash balance of about USD 105 million. Despite the weak quarter, the Company is paying a dividend of USD 0.0057 per share. So far, purchasing the Jerritt Canyon gold mine has proven to be a bad investment.

    Since the production costs in Nevada are too high, only a rising gold price can help. The Company wants to explore the property further to expand the resources and thus spruce up the mine for a sale. First Majestic's current market value is around USD 1.6 billion, with a share price of USD 5.89. The Company's net asset value is estimated at CAD 860 million. Accordingly, there is no urgent need for an investment here yet.


    After the fall of the debt ceiling, precious metals are in the focus of investors. The more money is printed, the less it is worth. Inflation will lead investors to invest more in precious metals again. Barrick Gold is diversified with its gold and copper production and has a strong second half ahead of it. Defiance Silver has two projects with high gold and silver resources and is currently attractively valued. The situation is different for First Majestic Silver, which is suffering from the takeover of the Jerritt Canyon Mine. Here, the valuation could still be too high.


    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.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author



    Related comments:

    Commented by Stefan Feulner on April 15th, 2024 | 06:45 CEST

    First Majestic Silver, Desert Gold, Albemarle - Escalation paves the way

    • Mining
    • Gold
    • Silver
    • chemicals
    • Lithium

    The events at the weekend, during which Iran carried out a massive airstrike on Israel for the first time, are likely to have escalated the already troubled geopolitics to a new level. It is not yet known whether Israel is planning a counter-attack. Precious metals gold and silver are once again likely to benefit from the uncertainties following the rather weak close to the week. The yellow precious metal could recapture the USD 2,400 per ounce mark, which could also boost the shares of producers and gold exploration companies.

    Read

    Commented by André Will-Laudien on April 15th, 2024 | 06:30 CEST

    Threat to Europe, Demand for Defense Persists! Rheinmetall, Almonty Industries, Renk and Hensoldt

    • Mining
    • Tungsten
    • armaments
    • Defense

    Europe is gearing up, as since February 24, 2022, peace has become a thing of the past. Europe lived in harmony for a whole 77 years, with the exception of the warlike dissolution of Yugoslavia as a regional conflict. Today's world resembles the situation in the 1970s and 1980s, as the Iron Curtain is re-establishing itself as a political border. The old world order that has prevailed since the end of the Cold War has been shattered by Russia's invasion of Ukraine. Consequently, NATO has regained a new role; after years of disarmament, it has now become a sought-after defense alliance. The accession of Finland and Sweden now strengthens the alliance towards the east. What now looms large is rapid rearmament! Where can investors still participate?

    Read

    Commented by Fabian Lorenz on April 11th, 2024 | 07:30 CEST

    Panic at AIXTRON and NEL! Is Kraken Energy an AI beneficiary?

    • Mining
    • Uranium
    • nuclear
    • renewableenergies
    • AI

    AIXTRON shares lost more than 5% yesterday. In addition to the price slide on the NASDAQ, a negative analyst comment added to the negative sentiment. Both the rating and target price of the AIXTRON share were significantly reduced. The same applies to Nel. The hydrogen specialist's recovery attempt was mercilessly stifled, and the share lost over 15%. The lack of incoming orders, in particular, is making analysts nervous. In contrast, Kraken Energy could soon be seen as an AI beneficiary. After all, Elon Musk is not the only one warning of an energy crisis and calling for the expansion of nuclear energy. Voices are getting louder that the computing power required for artificial intelligence will cause energy consumption to explode. In order to prevent a blackout, many countries are turning to nuclear power.

    Read