08. March 2021 | 11:08 CET
Barrick Gold, Varta, Osino Resources - Into the Fallen Angels!
For more than 6 months now, the gold correction continues. The high of USD 2,075 in August 2020 went down in waves until a cyclical low of USD 1,687 was reached last week. The trigger was the inflation warnings celebrated by Fed Chairman Powell, which sent the US bond market into the basement. The 30-year US bond (long T-bond) has now lost a full 10 points in price since October 2020, and the yield currently stands at 2.31%. Inflation bells ring at yields above 2.50% - so the distance to the signal line is no longer too great. If the ghost of inflation returns, the precious metals are likely to jump.
time to read: 3 minutes by André Will-Laudien
"[...] 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often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production.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.
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 - No bad numbers for 2020
Barrick Gold is the second largest gold mining Company in the world after Newmont Mining. In February, they released Q4 and FY 2020 results better than the market took them in. Barrick reported gold production of 4.76 million ounces, down 13% year-on-year. This decline was due, in part, to the Porgera mine being placed on Care & Maintenance status and Barrick losing over 200,000 ounces per year of production from Super Pit sales.
Fortunately, much higher metal prices in 2020 easily made up for the lost ounces, allowing Barrick to achieve zero net debt through repayments from cash flow. Simultaneously, there was significant margin expansion, which catapulted earnings per share 115% higher. Book value now reaches just over USD 13, and the book value ratio stands at 1.5, with a return on sales of 41.9%. Looking ahead to 2021 as a whole, Barrick has proposed a special dividend of USD 0.42, and the P/E ratio has fallen from 19 to 14 based on 2021 earnings estimates. Barrick has rarely been valued so favorably.
Barrick Gold is thus ideally positioned to accompany the coming gold turnaround with price gains. The share rose in the last week by a whole 5,2% to EUR 16,63, despite the falling gold price. We recommend immediate re-entry.
Varta AG - That was a bitter correction
The Varta share experienced its first Waterloo in 2021. First, the Reddit disciples jumped into the value as if there were no more shares tomorrow and drove the price up to EUR 180, then the sell-off followed within 4 weeks and the battery title sank like a stone to EUR 105. Now the price stands under December level, and in the current year, the minus amounts to already 10%.
Varta looks back on the most successful business year in its 135-year history. Sales grew by approx. 14% to EUR 870 million in 2020, adjusted EBITDA increased by approx. 145% to EUR 239 million. A special dividend of EUR 2.50 is to be distributed to shareholders in June. One can philosophize well about the operational development at Varta and the prospects of the battery manufacturer. The strategy remains in the same old waters. The dynamization in the direction of e-mobility hoped for by the stock market is hardly noticeable so far.
A look at the analysts' estimates shows the following picture: Varta is expected to increase sales by around 15% in the current year, with earnings growing disproportionately. Adjusted EBITDA could be up more than 25% by the end of the year. Adjusted earnings per share should even increase by around 40%. These are good prospects for a global market leader in the field of hearing aid and headphone batteries, but at the current level with a P/E ratio of 29, they are probably already priced into the share price. Therefore, wait for even lower prices between EUR 80 to 100 for a buyback. We had pointed out the present overvaluation in the past.
Osino Resources - Use the gold correction to enter the market
Canadian gold explorer Osino Resources Corp. is reporting news from Namibia. The Company has released an update on resource and exploration drilling at its Twin Hills gold project. The Twin Hills project is located in north-central Namibia, where Osino operates a large property of approximately 7,000 square kilometers. The large-scale, sediment-bound gold system was discovered by Osino in 2019 and is now being fast-tracked for development.
The eastern portion of the mineralization at Clouds will feed into the Twin Hills resource estimate, which is expected to be completed by the end of the first quarter of 2021. The current evaluation returned two high-grade intercepts at Clouds and is the first indication of the potential for additional high-grade zones. The intercepts of 8 meters showed 12.70 g/t gold, at 4 meters 13.71 g/t and at 12 meters 5.24 g/t. These are the highest grade intersections drilled to date at the Twin Hills project, and the challenge now is to determine their orientation and extent.
These results prove that the Twin Hills mineralized system carries the suspected gold in high-grade orbits, and it is likely that there is more to be found within the current drill area and surrounding exploration targets. An aggressive brownfields exploration drilling program of 25,000m began in late January and is expected to be completed by May. The Company also announced that Tony da Silva has been appointed as the Company's chief financial officer (CFO). He has 20 years of experience in audit and finance, having served as finance director of an Osino subsidiary since 2017.
Osino shares recently went up from CAD 1.00 to CAD 1.27, then back down 10% in the gold correction last week. Those who skillfully take advantage of the fluctuations will find a way to profit from the liquid share at any price. By the middle of the year, however, you should have built up a sizeable position because the good news is piling up.