13. May 2021 | 07:10 CET
Barrick Gold, Theta Gold Mines, Northern Data: Where growth meets substance
Gold is quietly stalking its way back to the USD 2,000 mark. In recent weeks, there have been increasing signs that inflation could become an issue again in the long term. At the same time, central banks are making no move to raise interest rates. On the one hand, this suggests that central banks might miss the right time to curb inflation and, on the other hand, that the relative attractiveness of gold to interest-bearing bonds will continue. Reason enough to take a closer look at exciting companies from the sector and an up-and-coming stock from the cryptocurrency sector.
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ISIN: CA0679011084 , AU0000035701 , DE000A0SMU87
"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
Barrick Gold: Big ship with a catch
Barrick Gold's stock is a perennial favorite for many investors. Why? The Company is a global leader when it comes to producing gold. Barrick is active on many continents and is thus very broadly positioned. While smaller and mid-sized producers fail to meet their targets with just a few problems, Barrick Gold has more room to maneuver, making the stock a solid value. But how stable is Barrick Gold actually? The mega-company drew some displeasure from investors, especially last year. The reason: Barrick Gold had completely lost its growth fantasy. Whoever mines gold on a large scale must also replace these reserves, and this is where Barrick Gold faltered in 2020. Among other things, the pandemic made it challenging to look at new projects and put them through their paces. While Barrick Gold had significant free funds in 2020, the investment backlog ensured that the Company paid out a special dividend. But it did not do the share price any good. On a one-year view, it is still down 18.5%.
The share has benefited from the rising gold price in the last five days, but this is only the logical consequence. To be able to take up a dynamic upward trend sustainably, Barrick must break new ground. The takeover of a smaller company could be just as much a part of this as a massive merger. The decision-makers at Barrick probably still have in the back of their minds that a business around strategic industrial metals would suit the Company well. However, nothing concrete has emerged so far. The share can continue to profit from rising prices for precious metals but is unlikely to beat the overall market. Barrick Gold lacks imagination.
Theta Gold Mines: This stock will be a gold producer in 2021
In contrast, the shares of Theta Gold Mines have more fantasy. The Company is on the verge of becoming a producer in 2021 and has rejected several takeover bids in the past. The Theta project is located in South Africa, not far from the Kruger National Park and wants to shine with production costs that should be around 50% of the current gold price. Four mines are to be built on the site of Theta Gold Mines, including open-pit mines initially and underground mines later on. Thanks to the gradual commissioning, Theta Gold Mines wants to generate cash flow and achieve growth quickly. Eventually, the Company is expected to produce 350,000 ounces of gold.
Analysts at Zacks Small Cap Research emphasize that the use of modern mining techniques and processing around gold could lead the Company to success and define a fair valuation of AUD 0.69 per share. Currently, one share is trading at AUD 0.24. The transformation from project developer to producer can be an exciting market phase for investors. The gold in the ground is valued much higher for a producer than for a pure developer. Investors looking for growth opportunities around gold should take a closer look at the stock.
Northern Data: Exciting story, tumbling stock
These days, those who want to invest in growth often think of cryptocurrencies. Northern Data's stock represents data centers used for, among other things, mining cryptocurrencies. Other uses include video rendering and other compute-intensive services. Just yesterday, Northern Data entered into a new collaboration with Canadian mining services provider Digihost Technology Inc. Part of the agreement is the sale of high-performance mining equipment. Furthermore, there is a profit share for Northern Data in the mid-single-digit million range. Since the Company has other mainstays besides cryptocurrencies, the stock could be an interesting alternative for cautious investors at first glance. However, the chart picture around the stock does not look rosy in the short term. On a three-month horizon, the stock lost almost 18%. However, the EUR 75 mark could provide support.
The opportunities to position oneself in the face of growing uncertainty around inflation are manifold. While cryptocurrencies are already the talk of the town and the sector has potential for setbacks, there are still hidden champions in gold stocks. Investors would do well to take developing trends seriously and pay equal attention to substance and growth prospects when making specific investments.