04. June 2021 | 11:12 CET
Desert Gold, Endeavour Mining, Newmont - Gold is rallying as expected
I pointed out the double bottom in gold in one of my earlier articles, and since then, the price has risen over USD 200. Interestingly, the buy-side consists mainly of young investors up to 25 years old. According to research from several online brokers, they own 39% of gold - 3 years ago, it was only 26%. This percentage is three times higher than in the overall population. Inflows into physically deposited gold ETFs amounted to nearly 34 tons. Driven by inflation fears and political tensions, gold is enjoying a renewed revival. We take a look at three gold stocks today.
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ISIN: CA25039N4084 , KYG3040R1589 , US6516391066
"[...] Troilus has the potential to be an entire gold belt. All of our work to date points to this, and each drill hole makes the picture we have of the Troilus project much clearer. [...]" Justin Reid, President and CEO, Troilus Gold Corp.
Desert Gold - Exciting new exploration targets found
Since the last update in mid-April, a lot has happened at Desert Gold's SMSZ project. New exploration targets and possible gold anomalies have been identified along the western concession area. Meanwhile, more than 75% of the planned exploration program has been completed. Exploration drilling is 59% complete, and auger drilling has already been over-completed at 107%, as has soil sampling at 110%.
Drilling to the north of the Goubassi West deposit means that the gold zone is now 3km long. The newly discovered gold zone returned 8.95 grams per tonne gold in a grab sample. A total of seven new gold anomalies up to 2.4km in length have been discovered. Currently, no results are available for 9,764 samples. A second drill rig is scheduled to arrive in June to accelerate exploration.
Approximately 170 additional air core holes are planned to be drilled over 8,500m to test the newly discovered gold anomalies further. The planned drill meters may be increased as more drill sample results are received. In parallel, the Company is working on the 43-101 report, which is expected to be completed in the fourth quarter. So things are moving forward, but the share has still not managed to break out of the sideways range of EUR 0.09 to 0.12. One should have this value on the watchlist and follow the news.
Endeavour Mining - Cheaper than the big miners
Endeavor Mining is the largest gold producer in West Africa with producing mines in Senegal, Ivory Coast and Burkina Faso and a strong portfolio of advanced development projects and exploration facilities in the Birimian Greenstone Belt. The Canadian Company has cleaned up its portfolio and is focusing on larger mines with lower costs. Currently, production can be had for USD 868 per ounce.
The Agbaou mine was sold, and the Terenga Gold Corporation was acquired in November 2020 already. As a result, the production costs for one ounce could be pushed down by USD 31 to USD 868. Due to the purchase of the Terenga assets, the Company currently still has debts, but these should be repaid quite quickly. In the future, the Company will invest more in exploration, with a lot expected from the greenfield area in particular.
The figures for the first quarter were impressive. Gold production doubled and profits climbed 111% to USD 0.50. If the gold price continues to rise, earnings will improve accordingly. A share buyback program is active and there is a dividend yield of 1.5%. While other large mining companies are valued at a P/E ratio of over 20, Endeavour has a P/E ratio of only 11.
Newmont - Basic investment in gold
Newmont is the undisputed number 1 gold producer. On May 19, the stock reached a multi-year high, which is not only related to the rising gold price. The first-quarter numbers were good. Net income for the first quarter of 2021 was USD 538 million, or 67 cents per share, and revenue was about USD 2.9 billion.
Operationally, improvement can be seen primarily at former Goldcorp mines, reflected in production volumes and production costs. In addition, the CEO announced that Newmont is looking at large copper projects, where production will be significantly expanded. Copper is an absolute trend metal due to electrification.
The stock has broken out to the upside, the Company has declared a share buyback program, and there is a dividend yield of about 3% on top. Newmont, as the number 1 gold producer, will benefit the most from a rising gold price. However, investors should not buy at the high but wait for a setback.