February 3rd, 2022 | 14:02 CET
Barrick Gold, Desert Gold, K+S - The big picture is right!
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Barrick - Things get exciting on February 16
The world's second-largest gold producer was able to make its shareholders happy with the release of preliminary key data in January but also helped to color the sentiment in the industry more positively again. With the Q4 figures, the Canadians could slightly exceed the production volume forecast at the lower end. As before, the high price level of gold and copper plays into the producer's hands.
Shareholders will receive more information on February 16 during the presentation of the final figures for the past fiscal year. Much more exciting, however, will be the outlook Barrick is likely to give for 2022. High profits and rising cash flows have led to a significant reduction in the Company's debt. The Canadians let the shareholders participate in the form of special dividends. Takeovers would undoubtedly boost the share price further. Analysts calculate an average upside potential for the mining share of almost 40%.
Desert Gold Ventures - Milestone reached and moving forward!
No sooner said than done. The gold explorer started the new year by reaching an important milestone. Desert Gold announced the first pit constrained mineral resource from five deposit zones at its flagship SMSZ project. The zones are within a tight, 12km radius in the southern half of the 440 sq km SMSZ project in Mali, West Africa. The state is the continent's third-largest gold producer. Analysts recently took a closer look at the Company's prospects.
The SMSZ project, named after the Shear Zone between Senegal and Mali (Senegal-Mali Shear Zone), is the region's largest contiguous non-producing land package. Geographic proximity to several producing Tier 1 gold mines captures the imagination.
The resource estimate totals just over 1 million ounces of gold. Accordingly, the measured and indicated mineral resource totaled 310,300 ounces of gold at 8.47 million tonnes and a grade of 1.14 g/t gold. The majority was in the "inferred" category, i.e. associated with higher uncertainty, with 769,200 ounces of gold (at 20.7 million tonnes and a grade of 1.16 g/t).
An additional exploration program consisting of approximately 17,000 meters of drilling is planned for 2022. Priorities are the Gourbassi West and Mogoyafara South zones. Follow-up drilling is also planned for gold-bearing drill intercepts from 2021 and previous exploration programs. Recently, the Company secured nearly CAD 1.7 million in a capital increase.
One thing is sure, the SMSZ project has excellent development potential. It is only a matter of when the Company will be revalued, not if. The Canadians are increasingly a potential takeover candidate. With a stock market valuation of just under CAD 23 million, the market has not yet priced in many factors.
K+S - Full speed ahead!
The K+S share ended the past year as the performance leader of the MDAX. The good earnings prospects and the low Company valuation give the shares a strong tailwind this year. Once again, the stock has been the best performer in the index of medium-sized German companies since January 1.
However, the analysts at Stifel believe that the fertilizer group has even more potential and recently raised the price target to EUR 22. That corresponds to an upside potential of around 25%. Stifel expert Andreas Heine cites the massive increase in profit expectations up to 2023 as the reason for the positive rating. In addition, Heine expects potash prices to remain high and sees a good chance that K+S could surprise positively this year. We fully agree with this assessment.
Commodities are cyclical investments. Looking at the big picture argues for rising commodity and precious metal prices. Barrick and K+S belong in a well-diversified portfolio. Desert Gold will certainly reward patient investors given the excellent framework conditions and project progress.
Conflict of interest
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