Close menu




April 4th, 2022 | 12:09 CEST

K+S, Almonty Industries, Barrick - Full speed ahead!

  • Tungsten
  • Gold
Photo credits: almonty.com

Across the board, commodity prices are going through the roof. Consumers and industry are already feeling the effects. Some price increases will only hit consumers with a time lag. Inflation, which recently rose above 7% in Germany, appears far from having reached its peak. The beneficiaries of the supply shortage are raw material producers. Their profitability and company valuations should continue to rise.

time to read: 4 minutes | Author: Carsten Mainitz
ISIN: K+S AG NA O.N. | DE000KSAG888 , ALMONTY INDUSTRIES INC. | CA0203981034 , BARRICK GOLD CORP. | CA0679011084

Table of contents:


    Lewis Black, CEO, Almonty Industries
    "[...] While tungsten has always played an important role in the chip industry, it is now being added to batteries for e-cars. [...]" Lewis Black, CEO, Almonty Industries

    Full interview

     

    K+S - Records

    The fertilizer producer's business has been going very well for some time. Last year, the MDAX-listed group benefited from higher demand from farmers and sharply rising prices for potash. In addition, the strategic focus on the potash and magnesium products segments with the sale of the salt business in the US and the associated debt reduction had a positive impact.

    As a result of the war in Ukraine, the supply shortage of potash, an important mineral fertilizer for plant cultivation, has been further exacerbated as sanctions have been imposed on the Russian and Belarusian suppliers Uralkali and Belaruskali. Together, the two companies produce about one-third of the world's potash. Fertilizer prices have risen to a record high.

    The Kassel-based company's shares, driven by its good operating business, were the best performing mid-cap on the German stock market in 2021. This year, too, the shares are at the top of the performance list. However, many analysts now no longer see any upside potential for the stock. However, the experts at Kepler Cheuvreux have recently raised their price target from EUR 36 to EUR 42.

    The Group itself has announced record earnings for the current year. According to the analysts' consensus estimate, the share has a very moderate 2022 P/E ratio of 5, which rises to 7 in 2023. The flip side of high fertilizer prices is rising food prices. While industrialized countries can cope with this, the situation in the developing world could soon prove dramatic. Because of the high fertilizer prices, farmers here will, in some cases, purchase less, and production will fall as a result.

    A detailed analysis of K+S can be found here: https://researchanalyst.com/en/report/k-s-ag-fertilizer-for-the-portfolio.

    Almonty Industries - Potential not yet reflected in the share price

    Numerous raw materials are indispensable for sectors such as technology or industry. The European Union has defined a catalog of so-called "critical raw materials", 30 in number. These raw materials, mainly metals, are urgently needed for business locations. Supply risk and economic importance lead to the classification "critical", as these raw materials cannot be extracted in Europe or only to an insufficient extent. In general, China dominates the global market with shares of up to 90%.

    One of these critical raw materials is tungsten. The chemical element has the highest melting and boiling point and is used in many industries. Canada's Almonty Industries is well on its way to soon becoming a globally significant tungsten producer, thus making supply chains more secure. The Sangdong mine in South Korea, which houses one of the world's largest tungsten resources, is scheduled to start operations in the first quarter of 2023. The project is fully financed.

    Recently, the Company was able to shine with two positive announcements. An agreement was reached with the Korean Mine Rehabilitation and Resource Corporation and Hannae For T to jointly mine and recycle rare metals such as tungsten and molybdenum for further processing into nano-tungsten oxide and other essential products for Korean domestic consumption in the semiconductor and battery sectors.

    In addition, the Company announced it is exploring the construction of a vertically integrated plant to further process nano-tungsten oxide for the South Korean industry. The product will be used to produce battery anodes, reflecting the strong growth in demand from the electromobility sector. To finance the project, a memorandum of understanding has been reached with the potential lender, Germany's KfW IPEX-Bank, which is already financing the Sangdong mine. Almonty is currently valued at CAD 205 million. Given the current market environment, this does not adequately reflect the Company's potential.

    Barrick - Upgrade by S&P

    Unsettled stock market times and rising inflation provide a good breeding ground for rising precious metal prices. The shares of the world's second-largest gold producer have also benefited from this recently. Since the beginning of the year, the shares of the Canadian company have gained about 30%.

    High profits in the past fiscal year led to net debt of almost zero. Analysts expect the net cash position to grow to USD 2.5 billion as early as 2023. Meanwhile, Barrick lets its shareholders participate in the Company's success with special dividends. The well-running business thus allows the Canadians to effortlessly develop their projects further. Acquisitions could also become an increasingly important topic.

    Recently, the rating agency S&P upgraded Barrick's long-term corporate rating from BBB to BBB+ with a stable outlook. S&P justifies this decision by citing considerable financial flexibility due to operational efficiencies. Experts also said that Barrick is very resilient in the event of lower gold prices.


    The environment for commodity producers is ideal. The three stocks presented are suitable for building a long-term, well-diversified commodity portfolio. K+S and Barrick reflect the aspects of agriculture and precious metals, respectively. With Almonty, investors can focus on the promising area of critical raw materials. The Company will soon be a major player in the global tungsten market.


    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.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Carsten Mainitz

    The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.

    About the author



    Related comments:

    Commented by Armin Schulz on April 17th, 2024 | 06:45 CEST

    Barrick Gold, Globex Mining, BP - Commodities In the spotlight: Supercycle started?

    • Mining
    • Gold
    • Silver
    • Commodities
    • Oil
    • Gas

    Global demand for commodities is reaching new heights, partly driven by increasing geopolitical tensions. The exchange of attacks between Iran and Israel is a case in point. This conflict, deeply rooted in religious and political differences, continues to escalate and could have far-reaching consequences for international stability and commodity markets. With this latest escalation of the Middle East conflict, security aspects in the global competition for important resources such as gold, silver and copper are taking center stage. China is demonstrating its hunger for resources. However, the price of oil has also risen recently. There has long been talk of a commodity supercycle. Perhaps it has now finally begun. Where should one invest now?

    Read

    Commented by André Will-Laudien on April 17th, 2024 | 06:30 CEST

    Discount battle over: Commodities on the counter-offensive! Rheinmetall, Power Nickel, BASF and Varta in focus

    • Mining
    • Nickel
    • Commodities
    • Gold
    • Silver
    • Defense

    Since the bombing of Israel by Iran, the clocks are ticking differently in the Middle East. The next stage of escalation has been reached. If Israel now uses the right to defense as an opportunity to initiate something bigger, it is here: the conflagration. Gold and silver are shining as safe-haven currencies and pulling long-neglected commodity shares through the roof. Now is the time to keep the sails in the wind and ride the long-awaited upward momentum. In the energy transition, strategically safer jurisdictions that can safely serve the growing hunger for commodities are still in demand. We highlight a few opportunities.

    Read

    Commented by André Will-Laudien on April 16th, 2024 | 07:05 CEST

    The cannons are thundering, and gold and silver remain in demand! Barrick, Newmont, Desert Gold and SMT Scharf in focus

    • Mining
    • Gold
    • Silver
    • Commodities

    The overnight attack by Iran on Israel underscores the current geopolitical uncertainty. Regardless of whether there is further escalation in the Middle East, the world has already changed dramatically since February 2022. This includes shifts in investor behavior. Until the first quarter of 2024, shares in the artificial intelligence and high-tech sectors were bullish; now, defense stocks and precious metals are on the agenda. After decades of disarmament, NATO, in particular, is now facing a decade of rearmament, and private investors are expressing their restraint in consumption by increasing their focus on private security. This is reflected in the increased purchases of gold and silver. For years, precious metals have been stable guarantors of the daily dwindling purchasing power. We believe that the new valuation cycle in the commodities sector is only just beginning, which is why we are examining favorable entry opportunities.

    Read