May 14th, 2021 | 08:16 CEST
Kinross Gold, SunMirror, Yamana Gold - Volatility is rising, now what?
Table of contents:
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
KINROSS GOLD CORPORATION - Quarterly figures presented, bargain alert
Founded in 1993, Kinross Gold is a leading gold mining company with an extensive portfolio of mines and projects in the US, Brazil, Chile, Ghana, Mauritania and Russia. During the past fiscal year, the Group produced approximately 2.4 million gold equivalent ounces and had over 30 million ounces of proven and probable gold reserves and over 59 million ounces of silver reserves. The senior producer operates mines and is equally focused on greenfield and brownfield exploration in North and South America, West Africa, and Russia. Kinross has used acquisitions in the past to drive expansion into new regions and production growth. The Group places a high priority on sustainability.
This week, the Toronto-based Company reported first-quarter numbers and held its annual shareholder meeting. In Q1, Kinross saw profits rise 10% to USD 149.5 million, or USD 0.12 per share, but missed market expectations. Production slipped slightly by 1.5% to 558,777 ounces of gold equivalent in the opening quarter. The decline was mainly due to lower production at Tasiast and Round Mountain, which was partially offset by higher production at Bald Mountain. The average realized gold price in Q1 was USD 1,787 per ounce, up 13% from the same quarter last year. Margin per gold equivalent ounce sold reached USD 1,031, an increase of 25%.
In the current fiscal year, Kinross expects to produce approximately 2.4 million gold equivalent ounces at a unit production cost of USD 790. In 2022 and 2023, annual production is expected to increase to about 2.7 and 2.9 million gold equivalent ounces, respectively. The stock is currently trading at just under CAD 9. With a market capitalization of CAD 11.2 billion, the Canadians are thus a solid player in the market. With a 2022 P/E ratio of 6.4, the stock is currently a bargain. All analysts who rate the stock arrive at a "Buy" assessment and set an average price target of CAD 13.05. That is a potential of almost 50%. What else is there to wait for?
SUNMIRROR AG - New analyst report continues to see price potential
The Swiss Zug-based holding Company invests in promising commodity projects and companies, focusing on gold and critical commodities. The Swiss Company's portfolio includes three properties in Western Australia: the Moolyella project (lithium, tin), the Kingston Keith project (gold and nickel) and the Cape Lambert project (iron ore).
Recently, analysts from Sphene Capital took a closer look at the stock and re-evaluated the projects mentioned above. The experts used three valuation methods (NPV, peer group multiples, sum-of-the-parts) and formulated a price target of EUR 174.30 per share. Currently, the shares are trading at EUR 156. But that the Company has the necessary institutional coverage is shown by the recent placement of a convertible bond in the volume of USD 10 million. The convertible bond entitles the holder to purchase a total of 133,305 bearer shares with a par value of CHF 1.00, and the conversion price is CHF 70 per share, a significant discount to the current share price. The convertible bond matures on May 30, 2022. In addition, SunMirror reported a letter of intent from an investor, Barracuda Group, to subscribe to a capital increase of 1 million shares.
According to the EU, the list of critical raw materials includes 30 elements. The economic importance of the respective raw material within the EU and the related supply risk is high. Thus, SunMirror is backing the right horse with this investment focus. We also consider investments in gold projects to be full of opportunities. However, interested investors should be aware of the low liquidity of the stock.
YAMANA GOLD INC - 30% Upside - at least!
Yamana is a Canadian-based precious metals producer. Its portfolio includes five producing gold mines and several advanced-stage development projects and exploration properties in North America, Brazil, Chile and Argentina. The Canadians are growing on several levels. Firstly, through the expansion and optimization of existing mines, secondly, through the development of new mines, and thirdly, the further development of its own exploration properties. In addition to this organic growth, inorganic growth, mainly in North and South America, also plays a significant role for Yamana. Skillful acquisitions and investments and an eye for potential have enabled the Company to grow so strongly in recent years. In April, Yamana acquired 6.4% of Ascot Resources in a private placement, strengthening its footprint in the British Columbia Golden Triangle. Earlier in the year, Yamana had completed the friendly all-stock acquisition of Monarch Gold.
Last summer, the share certificates were quoted around the CAD 9 mark in the course of the all-time high in gold and sank to CAD 5 in the following months. Currently trading slightly above CAD 6, Yamana has a market capitalization of CAD 5.7 billion. The relatively high 2022 P/E ratio of 12.4 is no reason for skepticism, even if one considers the much lower P/E ratios of Barrick (2022: 16.4) or Kinross (2022: 6.4). After all, Yamana is also growing significantly faster than its competitors. A total of eight analysts rate the share; half of them come to the assessment "Buy," the other half to "Hold." The average price target of the expert community for the title is CAD 7.76, an upside potential of around 30%. The most optimistic analyst even formulates a target of CAD 10. As gold bulls, we like all this very much.
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