January 21st, 2022 | 13:15 CET
Barrick Gold, Troilus Gold, Gazprom - Ready for takeoff: Gold ignites now!
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"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Barrick Gold - Good figures and 8% price premium
Barrick has come out of 2021 relatively well, down only about 13%. Some other stocks had corrected more than 30%. Now, the second-largest producer of gold reports its preliminary figures for the past year. There was an ambitious forecast of 4.4 to 4.7 million ounces of gold, but the uncertainties due to the pandemic were difficult to quantify at the time of the forecast. For the fourth quarter, Barrick Gold now reports a passable production of 1.2 million ounces, bringing the total for the full year 2021 to 4.43 million ounces. Barrick can thus meet its own forecast after all, and the markets are positively surprised.
It is very pleasing that the All-In Sustaining Costs (AISC) at the end of the year are also 4 to 6% lower than in the third quarter. Barrick Gold does not seem to be feeling much inflationary pressure yet. In addition, Barrick mined 126 million pounds of copper, a desirable commodity if the current USD 9,860 price, which is 23% higher, is anything to go by. Copper production adds up to 415 million pounds for the full year, but production costs here were 12% higher. Copper remains an essential pillar of the mining giant.
At least Barrick can reach the market expectations with these figures. The valuation is not too high, with a P/E ratio of 15 and a payout of over 2%. The Canadians were able to reduce their net debt to zero in 2021. From a technical point of view, things will get interesting when the EUR 18.50 line is overcome. Collect!
Troilus Gold - Melodious drill results from Québec
Another Canadian from Québec, Troilus Gold, reports good drilling results at the beginning of the year. The economy in the state of Québec has undergone several transformations in recent years. Since 1971, the provincial government has been pushing ahead with the construction of hydroelectric power plants in the James Bay watershed, especially on the 893-km La-Grande River. Today, the power plants in this region already produce over 83 terawatt-hours (TWh) of energy per year. A good climate contribution from Canada.
The territory of Québec proves to be particularly rich in natural resources with lakes, rivers and vast forests. As a result, the paper and wood industries and the production of electrical energy from hydropower are among the most important sectors in the province. However, the provincial government is also very pro-mining. The Troilus Gold precious metals project is located northeast of the Val-d'Or district and produced two million ounces of gold and nearly 70,000 tons of copper between 1996 and 2010. The new operating company is currently gearing up to build on the historic successes and is reporting recent drill results.
The latest report from January relates to the ongoing drill program at the Southwest Zone. It is located approximately 2.5 km from the historic prospecting zone. This zone was first discovered in late 2019 and has become one of the property's most significant mineral growth areas. The mineralized length has more than doubled in the last 12 months to 1.85 km. Within this, the majority of the reported intercepts are at surface, outside the pit shell. The tested zone identifies as very strong, with gold grades ranging from 1.32 to 4.52 g/t. The ore body appears continuous at up to 200m below the PEA pit shell. Drilling is now continuing at a rate of approximately 7,000m per month.
As a result of the continued drilling success at Troilus, which particularly highlights the technical developments and growth in the 'Southwest' and 'J' zones, the mineral resource estimate is now expected to be completed in the first half of 2022 in conjunction with the pre-feasibility study. Troilus shares are currently trading in a corridor of CAD 0.68 to CAD 0.76 and are technically about to exit this zone to the upside. With a share count of about 196 million, the current market capitalization is CAD 147 million. Troilus Gold should benefit disproportionately from the gold breakout due to the project's strength.
Gazprom - Europe plays with fire
Again there is trouble with the approval for the completed gas pipeline Nord Stream 2 because there is still no approval from the European Parliament. Meanwhile, Europe has already emptied its underground natural gas storage facilities by 63%. As the Russian production group Gazprom announced regarding the industry association Gas Infrastructure Europe, the storage facilities are currently only 25% full - at 46.9 billion square meters, this is the lowest level in history.
Numerous media reported at the same time that Gazprom had not booked any gas deliveries to Germany via the Yamal pipeline for February. What is going on here? Is the Russia-Ukraine conflict becoming a gas problem for all of Europe? At the moment, politicians on both sides are probably playing with fire. And all this, after gas prices had already increased by a historic 300% in 2021.
Given the supply situation in Europe, we expect an amicable agreement with Gazprom to be reached soon; the customer relationship has been flawless for years. Therefore, the threatening military gestures at the borders between NATO and Russia should not be overrated. Nevertheless, investors had let the share fall like a hot potato in the last two weeks. With a price of EUR 7.26, Gazprom is currently 23% below its 2021 high. Analytically, an estimated 2022 earnings per share of USD 3.11 provides a P/E ratio of only 2.6 with a dividend yield of over 5%. A few pieces should be added to the portfolio at these levels.
Political uncertainties, price increases and the pandemic are making people uncomfortable. These are not good times for big speculation. The trend towards asset protection should therefore drive liquid funds increasingly into tangible and commodity stocks. Barrick and Gazprom are well-known blue chips. Troilus is a very promising explorer with good potential.
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