25. May 2021 | 08:44 CET
Barrick Gold, Newmont, GSP Resource: With this stock from the start
Gold is trading around USD 1,900 again. At the same time, inflation data is picking up and Bitcoin is proving extremely volatile. These are good conditions for companies in the gold and commodities sectors. Although the shares of the best-known representatives are already slowly picking up, there are still numerous laggards. Commodity stocks have a lot to offer, from conservative to speculative - we outline this below using three stocks as examples.
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ISIN: CA0679011084 , US6516391066 , CA36249G1090
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Barrick Gold: Where is the price fantasy?
Barrick Gold has gained 7.3% in the last four weeks on the stock market. Nevertheless, over the course of a year, the share price has lost around 15.5%. Why? Shortly after the pandemic outbreak, Barrick Gold benefited from the rescue packages hastily launched worldwide and reached a preliminary record price of around EUR 25 last September. But what has happened since then?
Despite bubbling profits, Barrick Gold investors are worried about the future. Commodity companies need to replace their reserves. At Barrick, the big acquisitions were made a while ago. Investors fear the Company does not have much of a growth perspective. Barrick already had to pay a special dividend last fall. Although this made investors happy for a short time, most Barrick shareholders would have preferred an acquisition. The share mastered the 200-day line only recently, which means that the stock is once again in an upward trend. However, it is not clear whether the share will now rise more dynamically. The investment backlog is weighing on Barrick Gold.
Newmont: At a new high thanks to copper
Newmont, on the other hand, is somewhat further ahead. The mining group recently reached a new all-time high and is thus clearly ahead of Barrick. **However, it would be premature to conclude from this that Barrick now has catch-up potential. While copper occupies only a very small space as a by-product at Barrick, the popular industrial metal plays a much more significant role at Newmont.** As Tom Palmer, the CEO of Newmont, recently announced, the share of copper in production will be between 15% and 20% by the end of the decade. To this end, Newmont has several "mega-projects" in its sights. At the same time, Newmont remains convinced that gold will maintain its current level, which is a suitable environment for Newmont.
The fact that Newmont's stock has already moved into new spheres is no wonder given the announced copper offensive. Investors want a growth perspective, and Newmont is delivering. Only when Barrick follows suit or the gold price climbs to new heights should this share also pick up further momentum. For the time being, Newmont has won the duel between the big players in the gold sector.
GSP Resource: Teck neighbor currently worth only 5 million
The GSP Resource share is more of a speedboat than a fat ship. What Newmont and Co. can achieve in a good year, the shares of GSP Resource could well achieve in a week. The reason: The Company has a fascinating copper project in its portfolio and is only valued at around EUR 5 million. GSP is developing the Alwin Mine in southwestern British Columbia. The highlight: The property is one hundred percent surrounded by land owned by Teck Resources. Right next door, the commodities giant is mining copper at its Highland Valley mine. Since GSP Resource has already drilled grades of 1.29% copper equivalent over a distance of 14.1 meters in initial drill samples and plans to continue exploring in 2021, the Company is considered a takeover candidate.
While several companies in the vicinity of the mine could acquire GSP Resource's project, a collaboration with Teck is obvious simply because of the proximity. Teck produced 101,000t of copper in 2018 near GSP Resource. The mine has grown steadily over the years. Given the attractiveness of copper in the market, the prominent location of the historic Alwin Mine amid Teck's properties, and GSP Resource's small market cap, growth-oriented investors may want to take a closer look at the value. GSP Resource also has a second iron in the fire with the Olivine Mountain project.