February 3rd, 2022 | 10:56 CET
Barrick Gold, Standard Lithium, Alerio Gold: Commodity stocks after the crash
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"[...] Troilus has the potential to be an entire gold belt. All of our work to date points to this, and each drill hole makes the picture we have of the Troilus project much clearer. [...]" Justin Reid, President and CEO, Troilus Gold Corp.
Barrick Gold with surprise
Barrick Gold had a strong year-end spurt and could thus meet its annual forecast. Costs in the final quarter are expected to be below the third quarter's. So far, there is no sign of inflationary pressure - for example, in personnel costs - at Barrick. In addition, the North Mara and Bulyanhulu gold mines in Tanzania are doing surprisingly well. Both have cracked the production mark of 500,000 ounces in 2021 and thus belong to the gold giant's Tier 1 assets. At the same time, the two mines were among the group's problem children due to disputes with the Tanzanian government. The planned spin-off is thus probably off the table. In addition to the operational tailwind, the gold price is also playing a role at the moment. It has climbed back above the important USD 1,800 mark. The Barrick share would look better again from a chart perspective if it were to jump above USD 21.
Alerio Gold: 14 million market cap and 34 million already invested
Chart-wise, the share of Alerio Gold looks anything but good. It is currently quoted at around CAD 0.20. Investors can expect a lot from the young Canadian gold producer in the current year. The Canadians are active in Guyana in South America. There the Company owns two projects. The management team has over 12 years of mining experience in South America and has a lot planned. Alerio has already invested CAD 34 million in the 1,381-hectare Tassawini project. As part of the project development, 1,279 drill holes with a total length of 47,509m have been completed. Infrastructure, including a camp and air and water access, is also in place. And most importantly, initial gold deposits totaling 437,000 ounces have already been identified. Inferred, another 33,000 ounces will be added. Further positive newsflow is expected in the current year. Among other things, new resources are expected to be added due to the ongoing exploration program. In addition, an environmental impact statement is to be issued, and work is underway on a preliminary economic analysis (PEA study).
At the same time, Tassawini is not Alerio Gold's only project. The Harpy project is also exciting. It is located in the region called Guyana Shield and is expected to contain over 110 million ounces of gold. Gold is already being mined successfully in the region. In the immediate vicinity is Guyana Goldfields, which produced over 124,000 ounces of gold in 2019.
The CAD 34 million invested to date and the expected positive newsflow are offset by a market capitalization of CAD 14 million. If only the resources described so far were mined for USD 1,000 per ounce and sold at the current price of USD 1,800, this would flush over USD 340 million in profits into Alerio's coffers. Should the gold price continue to rise, then correspondingly more.
Standard Lithium: After the crash, now the recovery?
Standard Lithium was one of the absolute investor favorites in 2021. Driven by the advance of electromobility, the stock quadrupled to over CAD 14 in the past year. The correction that began in November 2021 accelerated into a solid crash in recent weeks. The Standard Lithium share was temporarily quoted below CAD 8.00. In the meantime, the share has recovered to over CAD 9.50. The chances that it will continue towards an all-time high are good. In the current year, Tesla, Volkswagen & Co. will further increase sales of electric vehicles and introduce new models. Demand for lithium is, therefore, likely to increase further. And Standard Lithium will continue to push forward with developing the South-West Arkansas project in the current year. At the end of 2011, the USD 100 million investment by Koch Investments Group - whose founders are among the wealthiest Americans - had caused a stir and filled Standard Lithium's coffers.
Gold mining and lithium shares are trading well below their highs and seem ripe for a recovery. In the case of Standard Lithium, this is already underway. Barrick and Alerio are anything but expensive, and the shares should jump if the price continues to rise.
Conflict of interest
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