09. October 2020 | 11:58 CET
Barrick Gold, Newmont, Blackrock Gold: Opportunities in the sloping market
First the central banks and now possibly a generous new US President Joe Biden - when it comes to reasons for rising prices, market commentators always find an explanation. But one thing is sure: most support measures or capital injections are bought with capital that has either been borrowed or created by central banks. In any case, such measures should also boost the price of gold. Barrick Gold's stock looks back on a successful year and has gained a significant 53% - but how much potential does the gold blue-chip still have after the rise?
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ISIN: CA09258M1014 , CA0679011084 , US6516391066
Why Barrick has run out of steam
Even before the gold boom, Barrick Gold had already laid the foundations for positive development and reduced costs. Although sales of gold increased recently, production costs did not rise to the same extent. The market rewarded this efficiency. On a one-month horizon, however, a loss of around 7% is still on the books - it seems as if the fantasy of investors has evaporated after the significant price increases in gold and gold shares in the summer. Even the robust dividend policy could not change this recently.
In the next few months, it could become exciting around Barrick gold: The company intends to continue its austerity measures and has announced that it plans to part with unprofitable projects. Whether the rising gold prices will change anything about this remains open. However, the expected transactions could indicate where the Company wants to go - the market's interest in the share may then increase again. Currently, however, the air is out of the share.
Newmont has exciting projects in the pipeline
Newmont's share price also performed mediocrely over the past four weeks, losing 6.3% in value. However, on a 12-month horizon, Newmont's share price increased by almost 60%. This company benefited recently from rising gold prices. In part, however, good company figures were also due to special effects. Like Barrick Gold, Newmont is also highly profitable. Only a few months ago, the company completed the integration of Goldcorp and now sits on a colourful bouquet of investments and projects.
Newmont's portfolio could also be streamlined and selectively expanded in the coming months. With quarterly revenues well above EUR 2 billion, however, minor changes to the portfolio are unlikely to be as significant. Like Barrick Gold, Newmont is considered a leisurely stock that should gradually benefit from the gold boom.
Drill results raise expectations
The situation is different for the young gold explorer, Blackrock Gold. Although the stock has also been under pressure in recent weeks, the company released drill results that were positively received by the market yesterday. Recent drilling at the Tonopah West Project in Nevada returned results of 26 g/t gold (Au) and 2,030 g/t silver (Ag). According to the company, these are the highest mineralization values in the current drill program. Further results are to follow in the coming weeks.
At Blackrock Gold, results are consistently positive, and the company believes it can raise expectations for the project. The property has not yet been systematically tested for gold, according to the company, and may therefore have great potential. Hecla Mining mines are situated adjacent to the project - Blackrock suggests that mineralization at its Tonopah West Project may look similar. Blackrock Gold is a Canadian company and comprised of industry professionals with many years of experience in the resource sector.
Small, agile companies, as salt in the soup
While companies like Barrick or Newmont have a conservative risk/reward profile, Blackrock Gold is considered a speculative paper with great potential. In the event of a breakthrough in Nevada, the market capitalization of EUR 59 million should soon be a thing of the past. However, the risks are also less spread than with large players such as Barrick. Nevertheless, investors should not ignore small agile stocks from the gold sector - especially during market phases in which many stocks from the gold sector move sideways. Small companies can provide positive surprises.