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July 14th, 2023 | 07:50 CEST

Bulls at the controls: Nel, Barrick Gold, Viva Gold! What about BASF?

  • Mining
  • Gold
  • chemicals
  • Copper
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Low inflation in the US has given new impetus to the bulls. Not only are growth stocks benefiting from the hope that the interest rate cycle is coming to an end, but also gold. Thus, the gold price reacted on Wednesday by jumping to over USD 1,960 per troy ounce. Top-tier gold stocks such as Barrick also responded positively. Exploration companies have significant catch-up potential, including Viva Gold. The Company is favorably valued and has again reported positive drill results. The fact that the interest rate cycle is nearing its end is also evident in the chemical industry. Most recently, BASF issued a warning, and there are sell recommendations. On the other hand, there are buy recommendations for the Nel share.

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: NEL ASA NK-_20 | NO0010081235 , BARRICK GOLD CORP. | CA0679011084 , VIVA GOLD CORP. | CA92852M1077 , BASF SE NA O.N. | DE000BASF111

Table of contents:

    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] 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

    Full interview


    Barrick Gold: Annual forecast confirmed

    The surprisingly low inflation rate of 3.0% reduces the pressure on the US Federal Reserve to further turn the interest rate screw. As a result, the gold price jumped to over USD 1,960 per troy ounce. Heavyweights such as Barrick Gold also saw gains. The world's second-largest gold producer also reported preliminary quarterly figures yesterday.

    The industry heavyweight sold 1 million ounces of gold and 101 million pounds of copper in the second quarter of 2023. The average price of gold in the second quarter was USD 1,976 per ounce, while the average price of copper in the second quarter was USD 3.84 per pound. In the second half of the year, production of gold and copper is expected to increase. As a result, the Company believes it is well on track to meet its gold and copper guidance for the full year. Full quarterly results are scheduled to be released on August 8.

    Viva Gold: Catch-up potential and positive newsflow

    With a rising gold price, more investor money should flow back into the gold sector. Exploration companies should then benefit disproportionately from this. They are a lever on the gold price, and valuations have fallen significantly in recent months. One of the high-potential candidates is Viva Gold. The Canadian explorer is currently valued at only around CAD 15 million. The price - the share is also listed on the Frankfurt Stock Exchange - has consolidated in recent weeks at around CAD 0.15 and is now ready for the breakout. The ongoing positive operating newsflow should ensure this.

    Viva Gold is developing a high-grade gold project in the western US state of Nevada. The Tonopah project covers 4,250 hectares and is located within Walker Lane, which is known for gold deposits. Among others, Kinross, Coeur Mining, Augusta, and Centerra are also successfully operating there. Since the purchase, Viva Gold has increased its mineral resource each year. The current mineral resource estimate is 394,000 ounces of gold measured and inferred an additional 206,000 ounces. A preliminary economic assessment (PEA) with an assumed gold price of USD 1,400 has been positive.

    Most recently, Viva released positive interim results from the ongoing 2023 drill program. Among other results, drill hole TG2302 averaged 1.4 g/t Au over 34 m and confirmed an extensive zone of high-grade mineralization in the area.

    Viva CEO James Hesketh commented, "We are very pleased with the initial results from this program. The southern continuation of the two high-grade fault zones discovered in our 2022 drill program have been confirmed. The focus of our 2023 drill program is to upgrade zones of inferred mineralization to measured and indicated mineralization on the closure of large drill gaps within the resource pit area and to determine the true orientation and extent of the near surface, high-grade fault zones discovered in our 2022 drill program." With that, Viva shareholders can look forward to more (positive) news later in the year.

    Analysts on Nel and BASF

    Not for the faint of heart are the shares of Nel and BASF. The share of the Danish hydrogen specialist benefited yesterday from the upgrade by JPMorgan. The analysts see the first signs of an operational turnaround. Sales and margins could increase further. However, the industry continues to be strongly influenced by political and fiscal policy developments. Nevertheless, the share is currently at least fairly valued. The analysts raised the price target slightly from NOK 11.50 to NOK 12. Currently, the Nel share is trading at around NOK 12.80. Therefore, the recommendation was raised from "Underweight" to "Neutral". Things will get exciting at Nel in the coming week, as quarterly figures are to be published on July 18. In the past, there were often strong price swings on this day.

    The BASF share reacted less strongly yesterday than the profit warning would suggest. At the end of trading, it was only slightly down and still above EUR 46. After the numerous bad news from the chemical sector in recent weeks, the message of the DAX group was no longer a surprise. Thus, eight analysts spoke out yesterday. All of them maintained their ratings. In part, the price targets were reduced, but then only minimally. UBS and Baader Bank rate BASF shares as "sell". It is a "Hold" for Warburg, Goldman Sachs, and Jefferies. JPMorgan, Deutsche Bank and DZ Bank advise "buy" and "overweight". The price targets range from EUR 40 to EUR 58.

    Inflation is falling, but the warnings in the chemical sector also point to an economic slowdown. Gold shares are a good idea, at least as an admixture. Exploration companies such as Viva Gold have considerable catch-up potential. With Nel, the coming quarterly figures become interesting. Is there an initial positive trend in the margin? At BASF, the current difficult environment is at least priced in, but a buy of the share is not imposing itself either.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

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