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December 9th, 2022 | 11:27 CET

Glencore, Tocvan Ventures, First Majestic Silver - Analysts enthusiastic

  • Mining
  • Gold
  • Silver
  • Commodities
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After commodities such as copper, nickel and lithium had climbed to new highs since the Corona low in March 2020, a sharp correction followed from March of this year due to fears of a recession, which could well continue for a while. In the long term, however, a continuation of the long-term upward trend is expected due to high demand on the one hand and low supply on the other. In the case of gold and silver, the easing of the tighter monetary policy will likely lead to a trend change to the upside.

time to read: 3 minutes | Author: Stefan Feulner

Table of contents:

    Glencore - Positive voices

    Just in time for St. Nicholas, the world's largest commodity trading and mining group, with its operational headquarters in Baar, Switzerland, published its annual Investor Update. Glencore announced that production volumes are expected to be scaled back in the coming year compared to this year's output, especially for copper, cobalt and ferrochrome. As a result, in fiscal 2023, total production in terms of copper equivalents is expected to fall to 4.0 million tons, down from around 4.1 million tons in the current year.

    In terms of copper production, the commodities group expects 1.04 million t, down from 1.06 million t this year. Cobalt production is expected to be downgraded to 38,000t from 45,000t and ferrochrome production to 1.31 million t from 1.50 million t in the current fiscal year. By contrast, coal production is expected to remain stable at 110 million tons. The Company plans to post a slight increase in nickel production.

    Glencore also expects lower earnings for the coming fiscal year. Due to the horrendously increased prices, EBITDA will likely be USD 32.3 billion in the current year. For fiscal 2023 the Company expects an adjusted operating profit of USD 28.7 billion.

    Analyst consensus continues to see Glencore as a buy candidate. Swiss bank UBS left its target price at GBP 560 with a "buy" investment rating after the investor event. Meanwhile, British investment bank Barclays lowered its price target for Glencore from GBP 680 to GBP 625 but reiterated its "overweight" rating. Analyst Ian Rossouw wrote that the commodity group's outlook was worse than feared.

    Tocvan Ventures - Better than expected

    Entrepreneurial successes in recent weeks sent the shares of Tocvan Ventures up sharply. After hitting annual lows of CAD 0.32, the stock rallied about 45% and is trading near its 2020 high of CAD 0.48. A breakout from the resistance area would generate a further buy signal to the downward trend formed since July 2021 at CAD 0.74.

    The reasons for the rebound are the better than expected progress in the current drill program at the El Picacho gold-silver project in Sonora, Mexico. As CEO Brodie Sutherland posted on the news channel Twitter, 10 drill holes have been completed that show "outstanding indications" of gold mineralization. Initial results are expected to be released early in the new year. In addition to the El Picacho project, the Canadians own Pilar, another gold and silver project in Sonora, Mexico. Both of Tocvan's projects are located near producing mines or major projects moving toward development. Near Pilar alone, there are three major projects within a radius of up to 80 km: Osisko Development's San Antonio Project, Minera Alamos' Sanatana Mine and Argonaut Gold's La Colorada Mine.

    In terms of personnel, Tocvan Ventures strengthened its Board of Directors with two proven experts. German Ralph Wintermantel is expected to provide an important link to the Company's strong European shareholder base, while Luis Arroyo is expected to contribute his decades of experience in advancing projects from exploration to production. Analyst firm Morningstar Inc. recently assigned a price target of CAD 0.88, reflecting a potential upside of about 90% at the current share price.

    First Majestic Silver - Mine sold

    The focus of the silver and gold producer is on deposits in Mexico and the US. Based in Vancouver, Canada, the Company currently owns and operates the San Dimas Silver/Gold Mine, the Jerritt Canyon Gold Mine, the Santa Elena Silver/Gold Mine and the La Encantada Silver Mine.

    First Majestic intends to divest the formerly operating La Parrilla silver mine in Durango State, Mexico. An asset purchase agreement has already been completed. Golden Tag Resources is the buyer in the transaction, which involves total consideration of up to USD 33.5 million. Upon closing of the transaction, First Majestic will receive 143,673,684 Golden Tag shares at a deemed price of CAD 0.19 per share for a total consideration of USD 20.0 million, representing approximately 40% of Golden Tag's outstanding shares. In addition, a total of three milestone payments have been agreed upon, which could provide the Canadians with another up to USD 13.5 million, either in cash or in the form of further purchaser shares.

    After hitting a low for the year at USD 6.31, the stock gained almost 50% to USD 9.29. However, this level has a broad resistance zone, and the stock is also overbought. A setback to the area of USD 7.50 is not unlikely.

    After the correction of the last months, there are attractive entry opportunities for both commodity and precious metal stocks at a cheaper level. Analysts are positive on Glencore as well as Tocvan Ventures. First Majestic Silver could correct again after the strong rebound.

    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

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author

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