April 9th, 2022 | 07:30 CEST
Barrick Gold, Ximen Mining, First Majestic Silver - Do precious metal stocks belong in the portfolio now?
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Barrick Gold - Search for investments expanded
After the gold companies could not profit from inflation for a long time, the outbreak of the Ukraine conflict gave the starting signal for a rally in the gold price, which shot up by USD 150 within a short time. This breakout is helping the world's second-largest gold producer Barrick Gold grow its earnings. At the beginning of the year, the Barrick share could still be obtained for USD 18.00. By March 8, the share price had risen to over USD 26, without any fundamental change.
The 2021 annual report, published on March 18, provided insights into the group's future plans. After no major acquisition could be made last year, the search for high-quality gold deposits will be expanded globally. The Asia-Pacific region, North Africa, the Middle East and Latin America were mentioned. But the Company also wants to become more involved in Canada. CEO Mark Bristow wrote, "A significant exploration portfolio has been secured in the country's Uchi belt, and the team is also reviewing other opportunities in the country."
He also reiterated the ESG approach Barrick is taking and attaches critical importance to it on its way to becoming the world's most valuable gold and copper company. The stock is currently trading at USD 24.61 and is in a clear uptrend. In addition, the 50-day moving average was able to break through the 200-day line, which is to be seen as bullish. The dividend yield is around 1.6% at the current price level.
Ximen Mining - On the way to becoming a gold producer
Ximen Mining is a Canadian precious metals explorer that owns various projects in British Columbia. Here, the Company is pursuing different approaches. The projects "Gold Drop" and "Treasure Mountain Silver" have been optioned. That means that other companies take over the exploration of the property, and Ximen receives cash, share payments or royalties in return. Other projects are 100% owned by the Company, such as the "Brett Epithermal" project or the "Amelia Gold Mine" project. However, the Company's flagship project is the "Kenville Golde Mine" property, which is on its way to becoming a producing mine.
On April 1, the Company announced a private placement of 10 million shares at 0.15 Canadian dollars (CAD). In addition, there is one warrant per share at CAD 0.25, valid for 2 years. This corporate action is one of the conditions for obtaining the USD 5 million financing for mine development. The permitting process is already underway, and an end is in sight; on March 15, the Company announced that it expects to receive a draft permit from the Ministry of Mines within 30 days. On March 31, it was reported that all supplies and equipment needed to develop the mine had been secured.
However, progress was made not only on the flagship last month but also on the Providence and Bud-Elk properties, where a VTEM geophysical survey was carried out. The data was used to identify drill targets at Bud-Elk to further explore the copper-gold deposit. Drilling was announced to begin on March 24. Despite the prospect of the producing gold mine, the share has not yet made gains and has been trending sideways since the start of the year. Currently, the share is quoted at CAD 0.20. Due to the capital measure, pressure could arise once again, which could move the share in the direction of CAD 0.15. Nevertheless, it is possible to get a foot in the door of a future gold producer at an early stage.
First Majestic Silver - Record in the 4th quarter
Annual silver consumption is about 1 billion ounces, of which 80% comes from mining and 20% from recycling. The industry uses 57% of silver as it has unique properties. Over the past 10 years, the silver industry has experienced a deficit of 500 million ounces. A good reason then to look at First Majestic Silver, especially since the price of silver has also picked up with the Ukraine crisis. The Company's focus is on silver and gold production in North America.
After production declined in 2020 due to Corona, 2021 sales climbed above 2019, and the Company expects sales to increase about 30% this year. On March 10, the Company announced its Q4 numbers and posted a new quarterly record of USD 204.9 million. A whopping 64% increase over Q3, despite a 5% drop in the realized average silver price. Cash is well-filled at USD 237.9 million.
Mineral reserves were announced on March 31. Due to the acquisition of the Jerritt Canyon Gold Mine, gold reserves increased by 118% to 1.32 million ounces. Silver only reported a 1% increase to 63 million ounces. Nevertheless, this is a significant increase overall compared to 2020, when resources were expected to fall. From the low for the year of USD 9.29 on January 28, it went up to USD 14.49. Currently, the stock is trading at USD 13.03, and the 50-day moving average has pierced the 200-day line quite freshly to the upside.
Precious metals belong in every portfolio for diversification. Whether you prefer to bet on gold or silver, everyone must decide for themselves. Barrick Gold is a safe bank in the gold and copper sector. Ximen Mining is about to become a gold producer. As soon as gold is mined, the share price should rise. First Majestic Silver is a good alternative for all silver lovers.
Conflict of interest
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