July 30th, 2021 | 14:07 CEST
Barrick Gold, Theta Gold Mines, Rio Tinto - Gold picks up again
After the FED meeting, the gold price was able to gain significantly. Both the lower quoted bond yields and the weakening USD helped the gold price jump. The FED held out the prospect of reducing bond purchases but did not give a fixed date. Global gold demand has brightened significantly compared to previous quarters. Only jewelry demand is well below pre-Corona levels. On the other hand, Central banks have bought three times more gold than usual in the quarter, namely 200 tons. Gold could now soar to new highs.
time to read: 3 minutes
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Author:
Armin Schulz
ISIN:
BARRICK GOLD CORP. | CA0679011084 , THETA GOLD MINES | AU0000035701 , RIO TINTO LTD | AU000000RIO1
Table of contents:
"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Barrick Gold - In a slumber
Barrick Gold disappointed analysts with its preliminary figures in mid-July, who had expected significantly higher production figures. It produced 1.04 million ounces of gold and 96 million pounds of copper. It didn't help that management still wants to stick to its full-year guidance. Despite a gold price of over USD 1,800, the stock is currently not getting traction.
The Company is one of the largest gold producers in the world and will benefit from high gold and copper prices. The question is when investors will recognize the value, especially since the Company has not been idle. Last Tuesday, the Company won four exploration licenses in Egypt.
The stock is currently trying to close the price gap from mid-June. If there is no consolidation there, the high from May at CAD 30.60 should be tested. In case of a setback, the share should not fall below CAD 25.70. Barrick is already worth buying long-term, especially since it also pays a dividend to its shareholders.
Theta Gold Mines - Exposed before important news
Theta Gold Mines is an Australian explorer whose gold project is based in South Africa in the Golden Triangle. The area covers more than 62,000 hectares and hosted 43 historic gold mines, resulting in data dating back up to 150 years. 2 open pit mines and 2 shallow underground mines have been identified and will be progressively brought into production. The initial target is 160,000 ounces of gold per year, and the first mine is expected to start production as early as 2022.
Management has already brought more than 20 resource companies into production, and thus, the Company will benefit from this experience. In total, resources of about 6 million ounces are assumed. The feasibility study assumes a mine life of a good 7.6 years at a cost basis of USD 980 per ounce. That corresponds to an 86% yield at the current gold price of USD 1,829.
The stock, recently tradable in Frankfurt, is currently suspended from trading. So there is important news about the Company. It will be interesting to see what will be announced. The last price before the suspension was AUD 0.22 and thus significantly lower than the high of this year at AUD 0.40. One should put the title on the watchlist and can position themselves accordingly after the announcement.
Rio Tinto - Business in China is key to success
The half-year figures of Rio Tinto were impressive and showed a new record value with USD 12.3 billion profit. Compared to the previous year, profit quadrupled. Sales were increased by 70% to USD 33 billion. The Group owes these results to the global economic recovery. China, in particular, has had a great demand for raw materials. China accounted for 58% of Rio Tinto's sales, followed by North America with 14%.
The jump in profits was also due to high raw material prices. Iron ore, Rio Tinto's main product with 44% of sales, doubled in price. Whether the production forecasts can be met depends on the one hand on the pandemic and the other hand on the weather, which could have a negative impact on production. Analysts assume that the prices for iron ore will be at a somewhat lower level, so profits are unlikely to be quite so high.
According to analysts, shareholders can look forward to a high dividend of around EUR 8. At the current share price of EUR 74.50, this corresponds to a dividend yield of over 10%. Since the end of May, the share has been running sideways. It is now at the upper end of the range and could break out to the upside. Dividend hunters can do little wrong here. Those who believe in rising demand for raw materials are also in good hands here.
Gold will continue to rise in the long term, also due to inflation. When jewelry demand resumes, we can expect demand to increase by 1600 to 2000 tons. Rio Tinto has a very diversified position and offers a high dividend yield. Theta Gold Mines is close to production but is currently suspended, so one should follow the value and the corresponding news closely. A kind of boredom has taken hold at Barrick. Even so, one of the largest gold producers is always worth buying.
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