14. June 2021 | 10:08 CET
Glencore, Barrick, Sibanye, Carnavale Resources - Inflation drives commodities!
The metal prices are going through the roof! After the first shock last week, when the People's Republic of China announced that it wanted to actively "fix" the prices for raw materials in the future, the next hammer followed at the end of the week: The consumer price index (CPI) in the USA set inflation at 5% - the highest level since mid-2008. Nevertheless, the central banks still see no reason to reduce the expansive monetary policy; risking an economic collapse in this fragile situation is too high. Given these settings, there are now two options for commodity investors to protect themselves against rising inflation: Invest directly in commodities or buy stocks in the commodities sector.
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ISIN: GLENCORE , JE00B4T3BW64 , CA0679011084 , ZAE000259701 , AU000000CAV5
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Glencore plc - Further expansion into gas
Glencore is starting to take greater advantage of opportunities in energy commodities. The commodities group and Russian oil and gas Company Novatek have signed a long-term supply agreement for liquefied natural gas (LNG) in the volume of 500 thousand tons per year.
The agreement was reached in early June on the sidelines of the International Economic Forum in St. Petersburg. Glencore will purchase the liquefied natural gas from Novatek's "Arctic LNG 2" plant on the Gydan Peninsula in northern West Siberia. It is delivered to various locations in Asia, where demand is very high. Access for ships via the Arctic Ocean and the route via the Bering Strait to Asia and China significantly shortens the usual transport routes, which increases the margin for Glencore.
The share price saw a volatile upward trend last week. After a short-term correction at EUR 3.63, the share price ended the week at EUR 3.85, just below the annual high of EUR 3.95. Driven by higher commodity prices, the price of the commodity producer and the world's largest commodity trader has been flying upwards for a year now. The prevailing inflation trend is convincing investors who are seeking their salvation in commodity-related investments. It can not go better - the trend is your friend!
Barrick Gold - High distributions to shareholders
Barrick Gold Corp. has confirmed that it will now pay out the first USD 250 million tranches of a capital return distribution totaling USD 750 million in mid-June. The exact amount is 14.05 cents plus a regular dividend of 9.00 cents per share, based on the number of outstanding shares as of May 28, 2021. This follows shareholder approval at Barrick's annual meeting on May 4, 2021. The remaining USD 500 million distribution is expected to be made in two equal tranches to shareholders of record on dates to be determined in August and November 2021.
As a result, the total shareholder return for 2021 rises to one of the highest in the industry. It marks another milestone on the proclaimed path to becoming the world's most valuable gold company. The recently released 10-year production outlook is supported by outstanding Tier 1 gold assets around the globe, with calculated mine lives much higher still.
Precious metals producer Barrick represents annual production of more than 7 million ounces, putting it at the top of the global gold mining list along with Newmont Mining. However, at EUR 19.2, Barrick shares are still a good 25% away from their summer high in 2020. Stock up!
Sibanye-Stillwater - Share buyback program announced
Sibanye-Stillwater is also doing splendidly at the moment. The South African announces that it will conduct a buyback through the market of up to 5% of its common shares issued as of May 31, 2021. The buyback program now formulated is a consequence of the Group's successful financial deleveraging and resumption of dividend payments in 2020 and is in line with the strategic capital allocation framework approved by the board in February 2021.
The Group's 2021 capital allocation framework prioritizes investments in operational sustainability, maintaining adequate cash reserves, paying dividends and prudent debt management. The long-term restructuring of the Company is now complete. It is, therefore, worth taking a closer look here!
Carnavale Resources - Multi-metal from Western Australia
The Australian Company Carnavale Resources, based in Western Australia, focuses on early-stage resource projects. Currently, 4 projects around platinum group metals, gold, nickel and copper are in focus. The strategy is driven by the unabated demand for batteries and so-called catalyst metals resulting from the political shouldering of decarbonization. Current properties include the Barracuda project, which contains nickel and copper, platinum group metals, the Grey Dam nickel project and two other gold projects.
At Kookynie, the third gold drill program has just been successfully completed. The high-grade intercepts include two meters, each with exceptionally high gold grades of 16.25 g/t and 3.34 g/t, respectively. Initial soil sampling is underway at the Ora Banda project to discover anomalies. Things are getting exciting at the Grey Dam nickel project. Here, the smallest particles are examined and interpreted with regard to influencing factors, such as the natural movements of the groundwater. In this way, indications of nickel sulfides and elements of platinum metals can be obtained to direct future work as efficiently as possible.
Currently, Carnavale has just under AUD 4 million left in its coffers, which will allow all drill targets to be worked this season. Early-stage exploration work offers the opportunity for significant increases in value but can also be unsuccessful. Therefore, it is essential to keep investments as low as possible and to replace projects that offer little perspective with new ones. In the end, the combination of different metals creates the prospect of robust resource estimates.
With 2.3 billion shares issued, the current market capitalization is AUD 19 million. The Company is 50% in firm hands, and the management is also significantly involved. All in all, Caranavale Resources is a good mix of projects with its development still in its infancy. A first position, therefore, makes perfect sense.