30. June 2021 | 13:59 CET
Gazprom, Theta Gold Mines, Yamana Gold: Which commodities are the best?
Commodity prices have always been considered an indicator of fundamental changes in the global economy. It is not for nothing that the price of copper is known as "Dr. Copper" because of its role as an economic indicator. Oil and gold also have a signaling effect: when the energy commodity rises, it stands for an intact global economy and incipient inflationary tendencies. Gold is also an inflationary metal in a certain sense. Added to this is the property as crisis insurance. But which commodities are best suited for investment? We run through three scenarios using companies as examples.
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ISIN: GAZPROM ADR SP./2 RL 5L 5 | US3682872078 , THETA GOLD MINES | AU0000035701 , YAMANA GOLD INC. | CA98462Y1007
"[...] 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
Gazprom: Giant with ESG deficiencies
The energy giant Gazprom stands for extremely favorable extraction costs and high reserves - in the vastness of Russia, there are numerous deposits just waiting to be extracted. It is not without reason that Gazprom is an important partner for both Europe and Asia when it comes to energy. Even though energy companies in Europe are already facing headwinds from the courts, Gazprom's business continues unabated. Oil, gas and even dirty coal are still important sources of energy. Even in Europe, the "green wave" will not ensure that oil and gas lose much of their importance - there are too few alternatives. Even if Europe takes on a pioneering role in climate protection, Asia will likely step into the breach as a consumer. It is hard to imagine China rashly giving up its potential in favor of climate protection.
Even if this attitude is regrettable from the point of view of climate protection, it is realistic. Europe, too, would do well to continue focusing on fossil energy sources instead of hectically going it alone to implement sustainable production methods and concepts within the industry. Whether this succeeds also depends on the construction of the Baltic Sea pipeline Nord Stream 2, which is politically controversial and leads from Russia to Europe. Gazprom's stock is cheap and also promising, given the continuing demand for oil. However, the Company does not yet have a strong ESG profile. A global player in the energy market should have that.
Theta Gold Mines declares war on dilution
More of a local hero than a global player is the Australian Company Theta Gold Mines. The Company is looking for gold in South Africa and is peppered with experts who have been active in mining in the past. Overall, Theta Gold Mines points out that its employees have already brought 20 mines into production in various capacities. Theta operates in the Golden Triangle in South Africa, geologically similar to the Carlin Trend in the United States. The Company aims to bring historic mines back into production and grow organically. Initially, underground mines will be re-exploited, and the resulting cash flow will be used to implement open pit projects. "By growing organically, we keep capital expenditures low and avoid unnecessary dilution or interest payments," CEO Bill Guy said in an interview a few weeks ago. According to a recently updated feasibility study, initial investments are expected to pay for themselves in as little as eight months.
Overall, Theta Gold Mines expects to mine at terms slightly above 50% of current gold prices. Production is to start step by step as early as 2022. As befits a modern mining company, Theta Gold Mines also focuses on sustainability. In addition to positive effects for 20,000 people in the project's vicinity, Theta Gold Mines also invests in education and environmental protection. CEO Bill Guy says, "For example, we will succeed in ensuring that our project even has a positive effect on the groundwater level at the bottom line and that the impact on the environment is as small as possible." Like many Australian stocks, the stock is a penny stock and has weathered the slump in gold well. That speaks to pronounced relative strength. With Theta aiming to create facts and go into production as early as 2022, investors should keep the stock on their radar.
Yamana Gold: Not all that glitters is gold
The Yamana Gold share is also on many investors' watch lists. Although Yamana's name says it all, it is misleading: after all, silver and copper account for more than 10% of sales. From 2024, copper is to play an even more critical role at Yamana. That makes the Company interesting, especially in the wake of the hype surrounding electromobility. However, one stumbling block is the situation as a medium-sized raw material producer: minor problems or production failures have a more significant impact here. While large producers can compensate for such issues and small companies in the development stage do not have such worries, something can always happen with shares like Yamana. Yamana's recent share price performance also confirms this: the stock lost 17% over one month.