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May 10th, 2023 | 09:20 CEST

Barrick Gold, Globex Mining, Deutsche Bank - Gold in rally mode

  • Mining
  • Gold
  • Silver
  • Banking
  • Investments
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The turmoil in the banking industry has recently hit Western Alliance Bancorporation. With the demise of Silicon Valley Bank, the gold price gained momentum and is heading for its all-time high. The constant increase of the money supply by the central banks and the threatening insolvency of the US support the gold price just as much as the gold purchases from China. In April, China collected another 8.1 tonnes of gold, about 10 tonnes less than in the previous month. In Q1, gold purchases by central banks were at record levels. Good for gold producers and explorers. We look at two today and see if Deutsche Bank has recovered after the turmoil.

time to read: 4 minutes | Author: Armin Schulz

Table of contents:

    Barrick Gold - Disappointing first quarter

    Rising gold prices play into the hands of one of the largest gold producers Barrick Gold, especially when looking at the figures for the first quarter. Gold production fell to 952,000 ounces compared to both the last quarter and the previous year. While production declined, the cost of an ounce of gold rose to USD 1,370, compared to USD 1,164 last year. A similar picture is shown by copper, where 88 million pounds were produced, and there too, the costs rose to USD 3.40. In the previous year, 101 million pounds were produced at USD 2.85. Adjusted earnings were USD 0.14 per share.

    Despite the weak figures, management is sticking to its forecasts. Production will pick up again, especially in the 2nd half of the year. The Pueblo Viejo expansion should be completed soon. The Porgera mine is expected to resume operations, and the optimization of the Wangima mine will also ensure higher production. As inflation is also declining and energy costs are currently falling, these effects will positively impact costs. The completion of a solar project should also reduce costs.

    Margins should improve, and production should increase from the second half of the year. CEO Mark Bristow recently said that the Company is looking for gold and copper deposits but that these do not necessarily have to come from acquisitions. There is currently little reason for investors to worry, especially thanks to the higher gold price. The Company will pay a dividend of USD 0.10 for the first quarter. The share has hardly suffered from the weak quarterly figures and is trading at USD 19.85.

    Globex Mining - Annual revenues from the Silidor Gold Project

    Globex Mining (Globex) acquires mineral properties and increases their value through exploration, options or joint ventures. The Company owns over 200 land parcels with a broad portfolio of precious metals, base metals and specialty metals and minerals in Canada and the US with resources, mineralized drill intercepts and untested geophysical targets. By optioning the properties for cash and shares, Globex also receives future royalties when the deposits are mined. The beauty of the business model is that the option partners assume the exploration risk, while Globex either benefits from potential future production revenues or receives more accurate data on the project.

    On May 4, the Company announced that it had contracted Geotech Ltd to conduct a 171 km aerial electromagnetic and magnetic survey on the Tyrone property in Quebec. The Tyrone property is located between Azimut Exploration's and KGHM International's properties. Azimut describes its Kukamas property as a promising area of copper-gold mineralization. Globex's Tyrone project contains surface showings of up to 47.2 g/t gold, 108 g/t silver, 10.96% copper, and iron. A further exploration programme is planned this summer. If the results are positive, the property could be considered for acquisition.

    There is good news from the Silidor Gold Project. The local company Agrégat RN Inc. has started mining material there. Globex will receive an advance of CAD 150,000 on the first 300,000 t, after which CAD 0.25 per t will be due. CEO Jack Stoch expects annual revenues of between CAD 400,000 and 500,000 per year. Due to the large number of projects being worked on, there is constant newsflow. Now that gold is rising in price, Globex's assets automatically become more valuable. At the beginning of the year the share price was still at CAD 0.68; now it is priced at CAD 0.83 per share.

    Deutsche Bank - Strong start to the year

    Turbulence in the banking sector? Germany's largest bank, Deutsche Bank, has had its best start in 10 years, according to its Q1 financial results. Pre-tax profit rose 12% to EUR 1.85 billion, the bank's best quarterly result in a decade. Net interest income also rose sharply by almost 20% to EUR 3.4 billion, while total revenues increased by 5% to around EUR 7.7 billion despite a decline in investment banking revenues. In addition, Deutsche Bank set aside EUR 372 million for potential credit losses, over 25% more than in the previous year.

    Despite the good results, Deutsche Bank CEO Christian Sewing wants to push through further cost reductions of EUR 2.5 billion. Among other things, about 5% of management staff will be cut. Last week, the group announced the takeover of Numis, a company broker from Great Britain, for USD 500 million. This is intended to strengthen investment banking and secure access to the corporate client network of the British.

    The annual general meeting will take place on May 17. Here, the management will undoubtedly give an update on the year to date. With the early repurchase of 6 bonds, the bank is sending a signal of strength. The quarrels surrounding Western Alliance Bancorporation have also put Deutsche Bank shares under pressure, but the support zone at EUR 9.21 has held. The stock is currently trading around EUR 9.63. At the beginning of May, Goldman Sachs issued a 'Buy' recommendation with a target price of EUR 19. Barclays, on the other hand, recommended 'Hold' with a target price of EUR 12.

    Due to the exponentially increased money supply since the financial crisis in 2008, money is perceived to be worth less, which is also evidenced by the current inflation. For many investors, gold is a safe haven in times of uncertainty. Barrick Gold is benefiting from this, even though costs have risen recently and production has even declined. Globex Mining alone has 114 precious metal projects that could yield royalties in the future. Another 107 properties offer everything needed for the energy turnaround. There is potential here. Deutsche Bank also appears undervalued compared to the competition, with a price-earnings ratio of 5.

    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.

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    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

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