17. December 2020 | 09:12 CET
Barrick Gold, Desert Gold Ventures, Yamana Gold - the winners of the next gold price increase
Central banks are printing new money at a rate that can make you dizzy. No one can answer where this will lead. The Corona pandemic causes further worry lines with its profound effects on our daily life but also in terms of the labour market and economy. Given these general conditions, it is not surprising that gold, as a crisis currency, has marked new highs in the year. Even though there is a consolidation at the moment, the outlook remains positive. Which stock should you bet on?
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ISIN: CA25039N4084 , CA0679011084 , CA98462Y1007
"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
BARRICK GOLD CORPORATION - diversified big player
With the shares of Barrick Gold, investors invest in an established and profitable gold producer. Only Newmont is just ahead of Barrick Gold in terms of annual production and market capitalization. Barrick currently has a market capitalization of around CAD 52 billion and plans to produce up to 5 million ounces of gold in the current year.
In addition to gold, the Group also owns and operates several copper mining operations and projects. Copper is in high demand in the wake of electromobility. In total, the Canadians operate in 13 countries worldwide, particularly in North and South America and Africa. The portfolio includes many of the world's most productive gold districts, with the Group focusing on high-margin, long-life mines.
According to the most recent quarterly data, Barrick achieved record free cash flow of USD 1.3 billion, up 151% year-on-year, as a result of high commodity prices. Currently, the stock is trading at CAD 29, well below its high for the year of CAD 41. Seven of nine analysts rate the stock a "buy" with an average price target of CAD 41.50.
DESERT GOLD VENTURES INC - the tension rises
Desert Gold Ventures Inc. is a gold exploration and development Company and focuses on Africa. The core of the portfolio is two gold exploration permits with large land areas, for the SMSZ project and Djimbala, in western Mali. Mali is the fourth-largest gold producer on the continent.
The day before yesterday, Desert Gold announced that its joint venture partner, Indigo Exploration, had commenced exploration work at the Djimbala Gold Project. After preliminary work, drill targets will be defined within the two zones, Djilefing and Forela. These zones have shown high gold grades in assays. Indigo Exploration acquired the option to purchase up to 100% of the rights to the Djimbala Gold Project subject to certain milestones. Desert Gold would thereby significantly increase its current interest in Indigo Exploration.
The Djimbala Gold Project is 100sqkm in size and is located near producing mines. If positive news from the exploration program follows here, the Company, with a current market value of CAD 21 million, should soon see much higher valuation levels. However, the company's own drilling program, which is currently underway, also offers enormous potential due to its dimensions of 20,000 meters.
YAMANA GOLD INC - strategically to success
The Canadian gold and silver producer is active in North and South America. Yamana's production in the current year will be equivalent to nearly 900,000 gold equivalent ounces.
Like Barrick, the Company reported positive third-quarter numbers in the wake of high precious metals prices. In early December, Yamana announced priorities for its strategic exploration program. The goal is to discover a stand-alone project with resources (inferred) of at least 1.5 million gold equivalent ounces within three years. In the longer term, the discovery is expected to result in a new cash flow generating mine with a production of 150,000 ounces per year for at least eight years.
The Canadians are currently valued at CAD 6.7 billion. The majority of analysts are optimistic about the share and formulate an average price target of around CAD 9.70. Based on this, there is a potential of almost 40%.