Barrick Mining and Formation Metals shine – While Commerzbank now faces other concerns

Barrick Mining – Good figures and new projects

Barrick Mining's latest quarterly results are impressive. Supported by high gold prices, the Company posted strong growth in adjusted net profits both year-on-year and quarter-on-quarter. The profit margin rose from 17.6% in the second quarter to an impressive 21.7%. A particular highlight was earnings per share of USD 0.47, the highest since 2013. This robust financial position allows Barrick to execute initiatives such as USD 268 million in share buybacks last quarter while further strengthening its balance sheet.

While gold currently accounts for the majority of revenue, the focus is increasingly shifting to copper. The Reko Diq project in Pakistan is a game-changer. The deposit contains enormous quantities of both metals, around 26 million ounces of gold and 7.5 million tons of copper, which are attributable to Barrick on a pro rata basis. Currently, copper accounts for only about one-seventh of revenue. With Reko Diq, this weighting will shift significantly. This diversification offers a certain degree of security, as the prices of gold and copper often develop independently of each other.

The outlook for both metals is exciting, but different. What actually speaks in favor of gold? Fundamentally, it is high global government debt and the loose monetary policy of central banks. This development could shake confidence in traditional currencies in the long term. Copper, on the other hand, is benefiting from a completely different dynamic. Global electrification, especially the boom in electric vehicles, is really fueling demand. However, a possible economic slowdown poses risks. In addition, there are company-specific factors such as management transitions and ongoing geopolitical tensions in countries such as Mali, which could affect operational planning. The share price is currently USD 32.06.

Formation Metals – A well-financed explorer focused on gold

Everything is currently proceeding according to plan for Formation Metals. The Company has not only started drilling on its flagship project, the N2 Gold Project in Québec, but has also significantly strengthened its finances. Formation recently completed the first tranche of a private placement, raising CAD 8.26 million out of a maximum of CAD 8.6 million. Together with existing funds, the Company now has working capital of approximately CAD 13 million, provided that the entire financing is completed. This solid financial base means that the ambitious 20,000 m drilling program at N2 is fully funded through 2027, with no risk of further dilution. CEO Deepak Varshney commented: "Building on the successes of our predecessors, this 20,000 m drill program will be critical to our goal of developing N2 into a near-surface, multi-million ounce deposit."

The Company's focus is on its flagship N2 project, a gold project located in the legendary Abitibi Greenstone Belt. The project has a historically proven resource of approximately 877,000 ounces of gold. This is divided into a larger zone with 18.2 million tonnes of ore at a grade of 1.48 g/t, and a smaller but high-grade vein containing 243,000 tonnes at an impressive 7.82 g/t. To date, 236 diamond drill holes have been completed, totaling over 54,500 meters of drilling. The main potential lies in the six mineralized zones, all of which remain open along strike and at depth. The fully funded drilling program aims to expand these known zones and explore for new discoveries.

In addition to its flagship N2 project, Formation Metals has two other promising projects in Québec. The Nicobat project focuses on nickel, copper, and PGM metals and has a historical resource of 5.3 million tonnes grading 0.24% nickel. The Rio Titanium project benefits from its location directly adjacent to Rio Tinto's significant Lac Tio ilmenite deposit. Formation Metals offers investors an attractive starting position, combining an advanced gold project, a solid balance sheet, and clear, funded milestones for the coming years - all of which provide significant upside potential. The share is currently trading at CAD 0.305, below the financing price of CAD 0.37.

Commerzbank – Strategy, risks, and market dynamics

Commerzbank remains the focus of takeover speculation. With a stake of just under 29%, UniCredit is a major shareholder and direct competitor. Commerzbank's ongoing share buyback program could cause this stake to exceed the critical threshold of 30%. This would trigger a mandatory offer for all shares, commonly referred to as the "30% trap." While this possibility is boosting investor sentiment, CEO Bettina Orlopp emphasizes that a transaction would not make sense at current valuations. She highlights the significant challenges of internal consolidation, particularly given substantial customer overlap.

A watchful eye is being kept on the French sovereign debt risk. Commerzbank holds French government bonds in its portfolio, but is increasingly skeptical about the situation there. France's national debt of around EUR 3.3 trillion and a projected deficit of over 5% in 2025 are weighing on its credit rating. Yield spreads for French bonds have risen sharply, in some cases even exceeding those of Greece. Although a default is not yet considered imminent, the risk of higher risk premiums and negative spillover effects across the eurozone is real and could indirectly impact Commerzbank's business model.

Falling interest rates pose a direct challenge to profitability. As a traditional SME bank, Commerzbank is heavily dependent on interest income. In an environment where the deposit rate is around 2.0% in 2025, margins are under pressure. Although refinancing costs are also declining, this relief cannot fully offset the drop in interest income. The bank is responding with strict cost control as part of its "momentum strategy." The target cost-to-income ratio of 57% for 2025 has been reaffirmed, as has the expansion of digital business models to diversify earnings opportunities. The share is currently trading at EUR 30.92.

Barrick Mining is shining with robust profits and is pushing ahead with its copper offensive through its game-changing Reko Diq project. Formation Metals, a well-financed explorer, can advance its ambitious drilling program at the flagship N2 Gold Project without the risk of further dilution. In contrast, the situation is quite different for Commerzbank, which is suffering from interest rate pressures and political risks in Europe, while ongoing takeover speculation is further unsettling the share price.