July 20th, 2022 | 13:24 CEST
Barrick Gold, Tocvan Ventures, Allkem - The right stocks for times of crisis?
Table of contents:
"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
Barrick Gold - Weak share price despite good figures
A few days ago, the world's second-largest gold producer presented its preliminary production figures for the second quarter. And they did not look bad at all. Gold output increased by more than 5% compared to Q1, and copper output increased by about 19%. The Company was thus in line with its guidance for 2022.
And analysts' expectations were also largely met. Only the Nevada Gold Mines property fell short of expectations by about 22,000 ounces of gold. However, for the analysts at Stifel GMP, this is no reason to shake their buy recommendation for Barrick. On the contrary: although Stifel assumes that the all-in-sustainable-costs per ounce (AISC) will be about USD 5-10 above the guidance due to rising costs at the end of the year, the analysts still see the price target at CAD 41 - a doubling potential.
One of the reasons for the positive attitude of the analysts might be the fact that Barrick consistently delivers a positive newsflow. For example, it was recently announced that the Company has reached an agreement with the government of Pakistan to develop the Reko Diq copper-gold project. The project, which is designed to have a 40-year life and is 50% owned by the Canadians, is expected to be developed in two phases and begin production in 2027 or 2028.
Tocvan Ventures - New anchor investor provides planning security
Investment house Sorbie Bornholm is the new anchor shareholder of Canadian exploration company Tocvan Ventures, which is engaged in developing two promising gold-silver projects in Mexico's Sonora Province. For this, the British are paying CAD 5.125 million in 24 tranches over the next two years.
For Tocvan CEO Brodie Sutherland, the strategic investor's entry is a boon, both because it avoids further dilution of existing shareholders for the foreseeable future and because the drilling programs are now fully funded for the next two years and possibly beyond.
The Company has just reported new successes in its exploration programs. Surface analysis over a 450-meter strip in the Murcielago zone at the Picacho project returned significant gold and silver mineralization. Lead and zinc were also detected in substantial concentrations. This has allowed the zone to be more precisely defined for the next drill program.
The exploration program at the second, much more advanced Pilar property also provided news. As part of the ongoing third phase of the drilling program, a total of four reverse circulation holes (drilling with reverse flushing) with a total length of 796 meters have been completed since June 22. The samples are now being assayed in the laboratory and the Company expects initial results shortly.
As part of the continued drilling program, follow-up drilling is planned next on the new Discovery Trend. This trend was only discovered in June at the end of the previous drilling phase and lies parallel to the previous mineralized zone.
Allkem - Entry opportunity?
Allkem, the global market leader in lithium production resulting from the merger of Orocobre with Galaxy Resources, has been struggling with heavy share price losses for some time. The share price has fallen almost 30% from its all-time high in April. Fundamentally, however, this weakness is unfounded. The Company aims to triple its lithium production by 2026 and thus achieve a 10% global market share. Crédit Suisse analysts expect Allkem to pay its first dividend of USD 0.69 per share in 2023. By 2024, this is expected to rise to USD 0.72.
So the reasons for the weakness of Allkem's stock are more likely to be found in the market environment. And indeed, there have been some recent reports on the future of lithium that question the importance of the battery metal for the energy transition. On the other hand, leading experts agree that this will not be the case in the short or medium term. For example, calculations by the German Federal Institute for Geosciences and Natural Resources (BGR) assume a severe shortage of the raw material in the next eight years (demand: up to 550,000 tons, maximum production with existing deposits: 358,000 tons). Analysts continue to see the shares of the Australians as a buy. The average price target of 14 analysts is AUD 15.35, a potential of over 50%.
The current stock market environment remains challenging and offers good opportunities for long-term investors. Commodities, in particular, will remain in demand in the future. Those who prefer industry giants should consider Barrick or Allkem. Apart from the well-known names, Tocvan Ventures offers an exciting investment.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
For this reason, there is a concrete conflict of interest.
The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.
Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.
The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.