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March 22nd, 2023 | 09:00 CET

Barrick Gold, Globex Mining, First Majestic Silver - The resurgence of precious metals

  • Mining
  • Gold
  • Silver
  • PreciousMetals
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In uncertain times, gold is considered a safe haven and enjoys great popularity among investors. Due to the banking industry's irregularities and Silicon Valley Bank's bankruptcy, a shift from the risky stock market to the precious metals sector was already apparent. This was further reinforced by the wobbling of Credit Suisse. With the crossing of a prominent resistance, the yellow metal is now striving for new highs.

time to read: 3 minutes | Author: Stefan Feulner

Table of contents:

    Jared Scharf, CEO, Desert Gold Ventures Inc.
    "[...] Our SMSZ project is the largest contiguous land package of any exploration company in the region at 400km2 and overlays a 38km portion of the prolific Senegal Mali Shear Zone. [...]" Jared Scharf, CEO, Desert Gold Ventures Inc.

    Full interview


    Globex Mining - Profiteer of the global crises

    While financial stocks search for their bottom, companies in the precious metals and commodities sector continue to climb. One of the primary beneficiaries of these uncertainties is the Canadian company Globex Mining. The Canadians have a unique business model and are an excellent addition to any portfolio due to their broad diversification. Globex Mining owns 217 holdings, primarily in North America. Almost all commodities are represented within the portfolio, starting with the precious metals gold, silver, platinum and palladium, through the industrial metals copper, zinc, iron and nickel, to rare earths and energy metals such as lithium, uranium and cobalt.

    Globex Mining generates revenue by optioning land packages from its inventory in exchange for cash and shares. As a result, the Company receives recurring royalties, and the partner assumes the exploration risk. In addition to acquiring and licensing properties, the Company also invests approximately CAD 1.5 million per year in the exploration of its properties.

    Radisson Mining Resources has agreed to two royalty agreements with Globex Mining, this time for the Kewagama Gold Mine at 2% and the New Alger Gold Mine at 1%. The Company has added several hundred metres to its indicated and suspected resources through drilling in recent years. In February, Globex Mining entered into a memorandum of understanding with Electro Metals and Mining. Assuming Electro Metals and Mining's capital increase is successful, not only will 7.5 million Electro Metals and Mining shares be transferred to Globex Mining over the next four years, but also CAD 6 million in cash and an annual 3% royalty from the start of production.

    The debt-free company still owns about USD 7.7 million in cash and about USD 7 million in load-bearing investments, such as shares equivalent to about CAD 5.5 million in Yamana Gold. The market capitalization, on the other hand, is just EUR 28.44 million.

    First Majestic Silver - Shutdown and profit warning

    Since the beginning of March, the gold and silver markets have turned and are set for a massive rebound. Majestic Silver also rallied from lows of USD 19.91 to USD 22.40. This recovery rally is now likely to come to an abrupt end for the time being, as the Canadian mining company, which focuses on silver and gold production in Mexico and the US, suffered a severe setback at its Jerritt Canyon mine, which generated around 21% of total revenues in 2022. In order to reduce overall costs, capital expenditures at the mine will be lowered with immediate effect, as well as staff reductions.

    All mining operations will also be halted until further notice. Production costs at the deposit are disproportionately high by industry standards at over USD 2,000 per ounce. During the suspension, the Company plans to process approximately 45,000t of surface stockpiles at the facility. Exploration activities are expected to continue in 2023. As a result of the actions, First Majestic Silver can no longer rely on previous production and cost guidance.

    In the wake of the announced closure, the stock lost more than 5% in after-hours trading. Therefore, there is no reason to buy the stock at the moment.

    Barrick Gold - On the way to number 1

    Despite a challenging market environment, Barrick Gold CEO Mark Bristow drew a positive conclusion to the past fiscal year during the publication of the annual report. 2022 marked an important milestone on Barrick Gold Corp.'s path to becoming the world's most valuable gold and copper mining company. The fundamental goals of the new company created by the merger have been largely achieved, and the larger goals are now within reach.

    North America, for example, is the value foundation of the major, he said. The real benefits of building the Nevada gold mine complex are now being seen in the form of mineral resource growth and new discoveries. The quality and prospects of the portfolio cannot be overstated. In Central America, the initiated plant expansion project at the Pueblo Viejo gold mine in the Dominican Republic is taking shape. With a reserve base of 20 million ounces, the life of the mine, one of the six Tier 1 assets in the gold portfolio, has been extended beyond 2040, and the average annual production rate is expected to exceed 800,000 ounces during that time.

    Another strategic goal is to expand copper deposits significantly. Work has begun on the reconstructed Reko Diq project in Pakistan, one of the world's largest and highest-grade undeveloped copper-gold deposits. In addition, the revitalized Lumwana mine in Zambia started a pre-feasibility study to expand the super pit.

    Precious metals are experiencing a revival due to the financial sector's woes. Globex Mining is broadly diversified and suitable as an admixture for every portfolio. Barrick Gold wants to be at the top of the gold producers. On the other hand, First Majestic is losing about one-fifth of its revenues due to the suspension of production.

    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

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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