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January 17th, 2023 | 16:28 CET

Commodity stocks poised for a comeback? Barrick Gold, American Lithium, Globex Mining, Standard Lithium

  • Mining
  • Gold
  • Lithium
  • Commodities
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Inflation is weakening, and the interest rate cycle is nearing its end. This argues for a comeback of gold mining stocks. In any case, the gold price is already pointing in the right direction. Now heavyweights like Barrick Gold must follow. Explorer shares offer disproportionate opportunities. However, Globex Mining is an interesting alternative for those who shy away from individual risks. With more than 200 investments in the commodity sector, the Canadians are positioned similarly to a fund. Currently, the cash balance alone corresponds to half of the market capitalization. In addition, there is positive news from the projects. The lithium sector is also starting to recover. Companies like Standard Lithium and American Lithium are recovering from the sell-off at the end of the year. In addition, takeover fantasy attracts.

time to read: 4 minutes | Author: Fabian Lorenz

Table of contents:

    Brodie Sutherland, CEO, Tocvan Ventures
    "[...] One focus will be on deposits near the surface. These would be good arguments for a quick production decision using the low-cost heap leaching method. [...]" Brodie Sutherland, CEO, Tocvan Ventures

    Full interview


    Globex Mining: High cash position and exciting investments

    While the gold price is approaching the USD 2,000 per troy ounce mark again, gold shares continue to struggle. But there is a good chance that mining and exploration companies will shed their underperformance in the current year. After all, inflation continues to weaken, and the interest rate cycle is likely to come to an end as a result. In such a scenario, explorer shares should react positively to an above-average extent. However, the risks are naturally greater for these companies. Globex Mining (GMX) offers an alternative here. The Canadian company holds interests in over 200 commodity projects and is thus comparable to a diversified fund. The share has jumped in recent days and continues to offer opportunities. The market capitalization is only around CAD 45 million, and almost half of this corresponds to cash holdings. At the same time, the investment portfolio is highly attractive: gold, silver, copper, platinum and palladium, as well as base and speciality metals. Globex Mining sells or leases the projects to other companies and, in return, receives cash, shares and/or royalty payments on successful subsequent production.

    Important for investors: Many holdings ensure a steady news flow. For example, Maple Gold Mines has had five follow-up drill holes. Interim results indicate that the North Mine Horizon intercept may be wider than previously thought. "The drill results continue to support the Company's view that multiple sub-parallel gold horizons exist beyond what has been mined at Eagle in the past and have expanded our target areas along a broader mineralized corridor with a stratigraphic width now exceeding 100 meters," said Matthew Hornor, CEO of Maple Gold. Near surface, there is a concentration of more than 10 g/t gold, and depth remains open. Globex Mining is also involved in an interesting project in Germany - Excellon. This Company owns prospecting licenses in matters totaling 340 sq km of high-grade silver intercepts. This project could be taken public as a spin-off under the name Silver City.

    American Lithium: Spin-off and NASDAQ listing provide push

    In recent weeks, American Lithium has shown what positive momentum a spin-off can develop for the parent company. In the fourth quarter of last year, plans for the IPO of the uranium subsidiary were published. The reason is that the value of the Macusani project is currently not fully perceived by investors. The IPO is intended to change this, and it will then be possible to concentrate fully on lithium. American Lithium has one project in the US state of Nevada (TLC) and one in Peru (Falchani). The TLC project is said to be one of the largest in the world with a deposit of 8.8 million tons of lithium carbonate. The preliminary economic assessment (PEA) is expected to be ready soon, and the value is speculated to exceed the Company's current market capitalization. The second price driver in recent days has been the listing of the share on the US stock exchange NASDAQ. It was known that this was planned, but it happened faster than expected. Driven by the fantasy, the share of American Lithium could increase by more than 30% in a few days and is now quoted at CAD 4.39. Should the value of TLC be as high as speculated, the rally could continue.

    Standard Lithium is also benefiting from the returning euphoria around lithium. Without any company news, the share jumped within a few days from USD 2.87 to USD 4.01. It is currently trading at around USD 3.70.

    Barrick Gold also bets on copper

    Investors are also hoping for a strong price movement at Barrick Gold. After all, the share price has risen from USD 16.55 to over USD 19.60 in recent weeks. Compared with the gold price, the industry heavyweight still has some catching up to do, as the high for the year is just over USD 25.50. Not to mention the all-time high in 2011 of over USD 55. At the same time, Barrick is currently in a brilliant operational position. Debt has been significantly reduced in recent years, expectations were exceeded in the third quarter of 2022, and production targets for the full year were confirmed. In the gold sector, the Group is currently focusing on developing its own projects and has made acquisitions.

    The focus is on the Reko Diq project in Pakistan. From 2028, production is scheduled to start in one of the world's largest undeveloped copper-gold projects. The copper pipeline is also being expanded with acquisitions and cooperations. Barrick recently agreed on a joint venture with Ma'aden involving two exploration projects in Saudi Arabia. Barrick CEO Mark Bristow said, "Recent high-grade intercepts from underground drilling within the existing Jabal Sayid mine demonstrate the potential for further ore body extensions. In addition, initial positive results from nearby new exploration targets indicate further growth prospects, which are being vigorously pursued by the exploration team. This intense focus on discoveries is being applied to the expanded portfolio through the application of the latest geological concepts and exploration technologies."

    Precious metals and lithium stocks were not among the winners in 2022, but that could change this year. Barrick Gold is a base investment in this regard. Globex Mining's business model offers more opportunities, with diversification reducing risks. The shares of Standard and American Lithium currently look strong.

    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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