February 11th, 2022 | 11:24 CET
K+S, Tembo Gold, Barrick Gold - Huge opportunity with the right timing
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"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
K+S - Forecast raised again
K+S proved last year what is possible with good timing. The potash price was still low at the beginning of the year, the Group was highly indebted, and there was little prospect of a good year in 2021. The share was quoted at EUR 9 at the beginning of February, ranging between EUR 8.00 and EUR 10.40. This range was broken upwards at the beginning of May. Anyone keeping an eye on the potash price could have guessed this development. In July, the 10-year high was broken, and there was no stopping the price in Brazil. At that time, the K+S share stood at about EUR 12.
Today, one is paying EUR 19.78 for a share because the prospects for the Company have improved abruptly. Debt has been drastically reduced, and revenues from the potash business continue to bubble up. Preliminary figures for 2021 were released on February 4. EBITDA is around EUR 960 million, EUR 130 million above the Company's expectations. The exact data will be available on March 10. On February 9, the Company raised its forecast for the current year. EBITDA is expected to be between EUR 1.6 billion and EUR 1.9 billion, which could almost double.
Thanks to the high prices achieved in the agricultural segment, the Company can absorb cost increases for energy, logistics and materials. The stockpile expansion at the Hattorf site can now also begin. The legal dispute with the Hesse branch of Friends of the Earth Germany (BUND) has been settled out of court. So only positive news for investors. Interested investors should nevertheless wait for a setback before entering.
Tembo Gold - Drilling program in the starting blocks
The Canadian gold explorer Tembo Gold was the talk of the town back in March 2012. The share price peaked at CAD 6.87. The prospect area in Tanzania covers 174 sq km and already at that time could boast impressive gold discoveries with up to 79.1 g/t gold. The perfect location, but unfortunately, bad timing. The government changed and was not sympathetic to mining. So the project was dormant for several years until a new government opened up new mining opportunities again. Since then, large sums have been invested in the East African country.
In total, the Company owns 4 projects whose boundaries are directly adjacent to Barrick Gold's large Bulyanhulu gold mine. Then in December, Barrick Gold grabbed Tembo and paid USD 6 million, receiving 6 mining rights and about 5.5 million shares at 0.27 Canadian dollars (CAD) in return, securing a 5.5% stake. Recently, the Company announced that the transaction is expected to close in the first quarter of 2022. On February 8, the new drilling program was announced. First, a suitable drilling contractor was selected to share Tembo's exploration camp, renovated in mid-February. A total of 7,000m of diamond drilling and 5,000m of RC drilling will be drilled at the Ngula 1 project, and drill targets have been identified using Artificial Intelligence from Goldspot Technologies.
So everything is in place. As soon as the final approval of the authorities is received, we will start full steam ahead again. The first drill results are eagerly awaited. Since reactivation, the share price has risen from CAD 0.135 to CAD 0.355. Subsequently, consolidation set in and pushed the share down to CAD 0.23. At the moment, one share can be purchased for CAD 0.255 and thus gets a better entry price than Barrick Gold. If the exploration work continues to be positive, Barrick will undoubtedly want more of the pie.
Barrick Gold - Resources increased
Barrick Gold is one of the largest gold producers in the world. In addition to gold, copper is also mined here, which promises a lot of potential for the future. The Company's geographic diversification gives it a crisis-proof position. Business has been good for some time, but the share price has not really taken off. Investors have long hoped for a major acquisition. The Company's cash holdings would allow for that, but the Company is empty-handed despite a couple of significant acquisitions.
Preliminary production numbers for the fourth quarter show just how well Barrick is doing. For the third year in a row, the Company met its full-year forecasts despite difficulties with Corona. A total of 4.44 million ounces of gold and 415 million pounds of copper were produced in 2021. Production costs were reduced by 3-5%. Tanzania mines are producing more than 500,000 ounces of gold, showing how valuable the production site has become. As a result, they are moving up to Tier 1 assets in Barrick's portfolio.
On February 10, the Company announced that the depletion of gold mineral reserves had been replaced by 150%. Probable mineral reserves are now 69 million ounces, up from 68 million ounces a year earlier. So things are looking good for the future. The stock is currently trading at USD 19.73 and continues to move sideways. Those who want to bet on a rising gold price are well served with Barrick Gold in the long term, especially since the Group is fundamentally much cheaper than its competitor Newmont.
Trading depends on the right timing. Inflation is rising more than expected by the experts, and the pressure to raise interest rates is increasing. Thus, stocks fall, and investors have more pressure to protect their money from inflation. Gold is an alternative. Barrick Gold is earning splendidly even at the current gold price. After years, Tembo Gold has been reactivated and already has a strategic partner on board with Barrick. K+S has shown what is possible with the right timing. 2022 could be the year of gold.
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.
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