12. November 2020 | 11:33 CET
Barrick Gold, Palantir Technologies, Osino Resources: Take a deep breath!
Small clearance sale! On wild vaccine Monday, the price of gold fell nearly USD 100 but has so far held at the critical support level of USD 1,850 after Pfizer and BioNTech announced a potential vaccine against the COVID-19 virus. Many investors hold gold and silver (also beaten by 7%) as crisis protection. This can go wrong in the short term - but in the long term, it is exciting.
"The virus may disappear, but that doesn't mean that economic growth will turn around on a cent," said Ole Hansen, Head of Commodity Strategy at Saxo Bank. "A lot of damage has been done that cannot be easily repaired or will take a long time to fix". That's just the way it is - COVID-19 changes a lot of things, especially the risk mentality of people. The economies have to go in new directions in 2021/22.
time to read:
ISIN: CA68828L1004 , CA0679011084 , US69608A1088
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Barrick Gold - winner in the crisis
Barrick Gold Corp. reported a net income of USD 882 million, or 50 cents per share, for the third quarter of 2020 compared to USD 2.3 billion, or USD 1.30 in the same quarter last year. Excluding non-recurring items, adjusted earnings per share were 41 cents, up 173% year-on-year. This figure also exceeded the consensus estimate of 32 cents. Barrick has mastered the COVID crisis very well.
Total gold production in the third quarter was approximately 1.16 million ounces, down 11.6% from the previous year. However, the average realized gold price is outstanding, which was USD 1,926 per ounce in the quarter, an increase of 30.5% year-on-year. The margin remained unchanged year-on-year at USD 1,065 per ounce, while costs continued to decline by 1.8% year-on-year to USD 966 per ounce.
Barrick operates one of the most profitable mines in the Democratic Republic of Congo (DRC), Kibali. In 2019, Barrick produced a total of 814,000 ounces of gold at "all-in sustaining costs (AISC)" of a staggering USD 693 per ounce! According to its statement, the Company has been looking for a successor to this world-class mine. A successor whose reserves are of course not inexhaustible. Barrick currently has a market capitalization of USD 46.1 billion and is a heavyweight in many commodity funds around the world.
Palantir Technologies - On the tracks of COVID
The IPO of Palantir Technologies Inc. was not launched under a lucky star. The shares were placed very favorably to the Company founders, and Friends and Family a few years ago, and were initially challenging to trade. However, the secretive data Company is technologically very much in demand. The German entrepreneur and venture capitalist, Peter Thiel, has a 29.8% stake in the Company and was long considered a supporter of Donald Trump. The stock exchange prospectus revealed that Palantir closed the past year with red figures of around USD 590 million - and in 2018 it was down by almost USD 600 million. Turnover in 2019 rose by a quarter to nearly USD 743 million.
Palantir specializes in data analysis and works a lot with security agencies and secret services, especially in the USA, one of the reasons why the Company keeps a low profile in terms of its business and its customers. With the Palantir software, governments want to gain a better understanding of the COVID pandemic. Sources reported to the Financial Times that so-called "test and trace officials" in the British government have been talking about using Palantir Foundry software to manage sensitive contact tracking data. The UK has more than 1 million confirmed coronavirus cases, and 47,340 people have died of the disease. The official goal is to gain a much deeper insight into how the virus spreads so that the government can act more quickly and accurately. As for data protection - this is something that is deliberately kept quiet.
Today, after hours, Palantir publishes its Q3 figures. Analysts expect the Company to report sales of USD 279 million and earnings per share of USD 0.03. For the full year, Palantir projected revenues of USD 1.05-1.06 billion, which is approximately 42% more than 2019, and with a market capitalization of USD 25.3 billion, this is a 25% factor on revenues. The valuation matches the Nasdaq - since the IPO on 30 September the share price has already increased by 50%.
Osino Resources - Gold not too scarce
Osino Resources Corp. is a Canadian explorer focused on the acquisition and development of gold projects in Namibia. The 23 exclusive prospecting licenses are located within the central and northern zones of the prospective Damara Gold Belt in Namibia, mainly near and along the strike of the producing Navachab and Otjikoto gold mines. Osino's focus in 2020 will be on advancing the exciting and new Twin Hills gold discovery and discoveries within the Karibib gold district. The goal is, of course, to sell at a good resource definition to the best bidding major, e.g., B2Gold. Similar projects in the past resulted in multiple factors of the original valuation in the case of a takeover.
Osino's core projects are conveniently located north and northwest of Namibia's capital, Windhoek. There they benefit considerably from Namibia's well-developed infrastructure with paved highways, modern railroads, and electricity and water in the immediate vicinity. Namibia can be described as mining-friendly and is praised as one of the most politically and socially stable jurisdictions on the continent. A good incentive for Osino to continue exploring new territory to consolidate its Namibian portfolio.
Osino's founders are experienced mining professionals with a solid track record in exploration and mine development. With good local relationships with government negotiators, a lot of positive things can be achieved. It could become an ideal takeover candidate for larger players in the gold business in one to three years if, by early next year, it becomes more apparent how large the deposits are. The speculative value has a capitalization of about CAD 135 million and tempts to buy. There are likely to be a few surprises here.