08. July 2021 | 14:56 CET
Barrick Gold, Triumph Gold, Sibanye-Stillwater - invest with foresight!
In the medium term, many market participants agree - the gold price will and must rise. The monetary policy is too expansive, and historically, the precious metal has always been in high demand when there is a crisis. At around USD 1,800 per ounce, the gold price is still more than USD 250 away from the summer high of 2020. But even the current price level allows producers to earn high profits, deleverage, pay higher dividends, buy back their shares, or diligently acquire projects. We show you three promising investment ideas from the gold sector. Who is the favorite?
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ISIN: BARRICK GOLD CORP. | CA0679011084 , TRIUMPH GOLD CORP. | CA8968121043 , SIBANYE STILLWATER LTD. | ZAE000259701
"[...] Our SMSZ project is the largest contiguous land package of any exploration company in the region at 400km2 and overlays a 38km portion of the prolific Senegal Mali Shear Zone. [...]" Jared Scharf, CEO, Desert Gold Ventures Inc.
TRIUMPH GOLD CORP - Drilling program has started
If you are looking for an alternative away from the big producers, you are in good hands with Canada's Triumph Gold. First, the Company operates in one of the best mining jurisdictions globally - the Yukon Territory, in northwestern Canada. Second, increases in precious metal prices usually have a strongly disproportionate effect on the share price for exploration companies. How substantial the leverage depends on several factors. Nevertheless, project quality is central here.
Triumph Gold is focused on developing the Freegold Mountain gold-copper project (Yukon Territory). A few months ago, it expanded the area with the acquisition of 258 claims adjacent to zones of the 200 sq km Freegold Mountain project. A positive side effect is that the seller has become a major shareholder of Triumph as part of the transaction. It is Canada's Teck Resources, a billion-dollar diversified resource company.
In late June, the Company announced the start of the 2021 drill program at the Freegold Mountain property. After that, Phase I will include 8,000 meters of diamond drilling. The program's objective is to identify new inferred resources, upgrade inferred resources to indicated resources on the Nucleus and Revenue deposits, and discover and develop zones of mineralization on prospects outside of the deposit areas. Phase II is planned to drill an additional 8,000 meters on several zones.
With the program just getting underway, investors can expect plenty of news from the Company in the coming months. In addition to gold price increases, good drill results and discoveries, in particular, provide the impetus for rising share prices. With a market capitalization of CAD 24 million, the stock has so far moved under the radar of most investors, so interested parties can still get in at a reasonable price.
BARRICK GOLD CORPORATION - One of the largest in the industry
Barrick Gold stock allows investors to benefit from the performance of the world's second-largest gold producer, with a current market capitalization of CAD 47 billion. The Canadians own many of the world's most productive gold acreage, allowing investors to benefit from rising precious metal prices. In addition, the Group owns several copper projects, which form the second production pillar. Copper is also predicted to perform well in the medium term, as demand for the industrial metal is strong in the wake of electromobility. In the short term, the stock may disappoint, with a drop of CAD 10 in recent months to CAD 26 now. Last summer's highs were as high as CAD 40. Analysts attest the title on average a reasonable price level of CAD 36.73, about 40% more than currently has to be paid for the papers. Barrick, as an established and almost debt-free player, also pays a small dividend.
SIBANYE-STILLWATER LIMITED - Extremely favorable to have
Sibanye-Stillwater is one of the leading international precious metals producers and has a diversified portfolio of platinum group metals (PGM) projects in the United States and southern Africa and gold mines and gold projects in South Africa. In addition, the Group owns several early-stage development (exploration) properties targeting the copper, gold and PGM commodity groups located in North and South America. This year, the Group, established in 2013, diversified again and entered the battery metals sector by acquiring a 30% stake in Keliber Oy of Finland. Keliber's key asset is a lithium project currently in the development phase in the Kaustinen region of Finland.
In recent weeks, the South Africans have published a number of good news items, which have not yet been reflected in the share price. For example, the Company announced its intention to acquire 5% of the outstanding shares as part of a buyback program. It also updated its ESG policy. On the other hand, some market participants were critical of the share sales by insiders. However, given the excellent share performance, we believe this is an understandable move to realize some of the gains when the share price is high. Fundamentally, however, the Group, valued at USD 12.5 billion, is anything but expensive. The 2022 P/E ratio is an astonishingly low 3.8, and the dividend yield is a whopping 8.9%. This assessment also reflects the opinion of analysts. On average, the experts forecast an upside potential of 43%!
The global framework conditions speak for rising precious metal prices in the medium term. Whether investors invest physically in gold or shares depends on the individual risk appetite. Those who want to invest in established producers that also pay a dividend should take a closer look at Barrick and Sibanye. Those who are a bit more risk-averse should take a look at Triumph Gold.