Barrick Gold, MAS Gold, Gazprom - The conflict and its consequences

Gold as a safe haven

In the past year, it was often mentioned that an investment in gold should serve as the best inflation protection in the long term. Due to the high inflation rates, which are now also seen by central banks as longer-term, the low interest rate level, and the high indebtedness of several countries, gold should continue to count as a long-term alternative to fiat money. Should the central banks implement the announced interest rate hikes this year, this would not change anything. In addition, the precious metal is now also back on the table as a crisis currency due to the Ukraine conflict that is currently taking place. Currently, a sustainable break of the resistance at USD 1,916.35 would be important for a consolidation formation to follow.

Gold mining stocks before the turnaround?

While investments in physical gold would be a good idea, shares of gold producers and exploration companies are quite attractive at the current level. Last week, the second-largest producer Barrick Gold proved that business is flourishing with the figures it presented. At USD 3.31 billion, sales were around 17% higher than in the previous quarter, thus exceeding analysts' estimates of USD 3.147 billion. With net income doubling to USD 726 million and earnings per share of USD 0.35, the analyst consensus was also exceeded here. In addition to a share buyback program totaling USD 1 billion, shareholders will receive a dividend of USD 0.10.

Due to rising energy and generation costs, production will be somewhat more costly for Barrick Gold next year. All-in sustaining costs rose 17.5% in copper production to USD 2.62 per pound from USD 2.23 per pound a year earlier. In the gold segment, costs rose about 6% from USD 967 per ounce in 2020 to USD 1,026 currently. For the next quarters, the Company plans costs between USD 1,040 and USD 1,1120. After the figures, the price rose sharply by around 6%. Currently, the Company, based in Toronto, Canada, is trading at USD 22.86. An overcoming of the mark of USD 25.37 should now take place promptly to be able to generate a new buy signal.

MAS Gold with positive signals

Of course, the Junior Explorer MAS Gold is not yet comparable to the big players in the industry. Still, the Company, which has a market value of only EUR 10.74 million, is attracting attention with a constantly positive news flow. MAS Gold announced the start of a drilling program in the 843 hectare Comstock Metals gold project. It is adjacent to the already owned Preview-North property in northeastern Saskatchewan's La Ronge Gold Belt. Together with parts of the Preview-North property, it is located within the Lac La Ronge Provincial Park Mineral Exploration Zone.

The 8,000-meter program has commenced on the North Lake deposit and will include drilling on both the Preview SW and Point deposits as the program progresses. Drilling at the Preview SW property is the subject of the agreement with Comstock Metals.

MAS Gold owns four properties totaling 34,000 hectares in the historic La Ronge Gold Belt mining district. In this area, which is well developed in terms of infrastructure and has very mining-friendly legislation, lies, among other things, the former Contact Lake gold mine, which was operated by Cameco until 1998 and whose rights MAS Gold was able to secure in 2021. In addition, the Company owns the properties Preview North, Greywacke Lake, Elizabeth Lake and Henry Lake. Preview-North alone is believed to contain resources of around 494,000 ounces, while Greywacke is estimated to host 156,000 ounces. In total, the Company anticipates gold deposits in excess of 1 million ounces. With the positive news flow and in anticipation of a summary resource estimate expected in the first quarter, the full potential of MAS Gold should become apparent.

Pipeline on hold

A moment of shock had to be experienced by Gazprom investors after the announcement of Russia's President last night. It was already known that sanctions concerning Nord Stream 2 would not be far behind. The German Chancellor Olaf Scholz had announced in a press conference that he had asked the Ministry of Economics to withdraw the existing report on the analysis of supply security at the Federal Network Agency. As a result, the pipeline could not be certified and consequently could not go into operation.

Little surprised by the ongoing sanctions, Deputy Foreign Minister Andrei Rudenko told the Interfax news agency in Moscow on Tuesday: "Moscow is not afraid of anything." After the sell-off, the share is well supported in the EUR 5.50 range. In terms of valuation, it is also attractively valued again. Of course, the further course of the conflict is uncertain.

After Corona and the inflation worries, the Ukraine conflict is currently coming to the fore. Gold stocks such as Barrick Gold and MAS Gold benefit from the uncertainties and the threat of war in Europe. In contrast, Gazprom is suffering from the sanctions concerning Nord Stream 2.