Kinross Gold, Troilus Gold, Endeavour Silver - US inflation boosts gold price

Kinross Gold - Fire in Tasiast ore mill causes quarterly loss

June was a black month for Kinross Gold. The ore mill at the Mauritanian mining site Tasiast, which has been in operation since 2008, went up in flames, causing the Company's gold production to plummet by up to 20% for the following five months. It left the Company with a quarterly loss of USD 44.9 million, or the equivalent of USD 0.04 per share. Kinross nevertheless decided to pay the announced quarterly dividend of USD 0.03 as scheduled on December 15 to all shareholders on the dividend record date (December 1).

In the meantime, the plant, located about 300 km north of the capital Nouakchott in Khatt Atui, could be ramped up again. Full production capacity is targeted again for December. Incidentally, at USD 20 million, the repair costs turned out to be much lower than initially feared. Originally, costs of up to USD 35 million were expected. The Company was forced to revise its guidance downwards for the 2021 financial year due to the limited production in the third quarter. Instead of the expected 2.4 million gold equivalent ounces, the Company will only produce 2.1 million ounces. For 2022, however, Kinross projected an increase to 2.7 million gold-equivalent ounces and even to 2.9 million ounces for 2023. Combined with the current rise in the gold price, these are bright prospects for the Company.

Troilus Gold - Fantastic results from the gold valley of Québec

The Val-d'Or - in German, the "Gold Valley" - is located in the west of the Canadian province of Québec. Even though geographically it is not a valley but rather a plain, the name does not come by chance. As early as 1911, gold was discovered in the region around Lac De Montigny. In the northeast of this zone, the historic Troilus Gold property is located, where more than 2 million ounces of gold and more than 70,000 tons of copper were mined between 1996 and 2010.

Some time ago, the Troilus Gold Project received a new ownership structure with Troilus Gold Corp. In order to build on old successes, new exploration drilling of 80,000m has already been carried out, and in July 2020, the project entered into a feasibility study (PEA). A resource estimate of 8.1 million gold equivalent ounces was confirmed, with a total value of CAD 1.9 billion at a gold price of USD 1,750 at the time.

The Company has recently announced that it has succeeded in extending the strike length of the Southwest Zone by 25% through extension and delineation drilling. Following the drilling successes achieved, the ongoing exploration phase, which is currently being continued at a drilling rate of 7,000m per month, is now, contrary to original plans, not to be completed in the fourth quarter of the current year. It is to be completed only in the first half of 2022 with a resource estimate and a pre-feasibility study so that the current results can still be sufficiently considered. Commenting on this, Troilus Gold CEO and Director Justin Reid said, "Our outlook on the size and robustness of the project [has] never been more positive." Given the recent drill results, the Company is currently still moderately valued at CAD 167 million.

Endeavour Silver - Silver production at full speed

Like competitor First Majestic Silver, Endeavour Silver has chosen to withhold its precious metals production from the global market due to low price levels. As a result, inventories rose from 459,659 ounces of silver to 1,067,404 ounces in the third quarter, and gold from 2,835 ounces to 3,239 ounces as of September 30. This resulted in a quarterly loss of CAD 4.5 million, or CAD 0.03 per share, compared with a net profit of CAD 0.5 million in the corresponding quarter last year. One reason was that inventory was carried at a price of CAD 18.3 million when the market value at the end of September had actually been CAD 29.2 million.

CEO Dan Dickson explained that the Company plans to sell the inventories in the following months and thus ensure a strong final quarter. In the process, production achieved top results in the third quarter. The group significantly exceeded its self-imposed production targets with an output of more than 1.3 million ounces of silver and 10,451 ounces of gold. Against this background, the Company's management raised its forecast for 2021 to a figure of 7.7 to 8 million silver equivalent ounces. That corresponds to an increase of 26% to 31% compared to the initial planning. Investors were impressed by the prospects and have already caused prices to rise in recent days. The majority of analysts are also currently leaning towards a buy.

The fundamental data has not been so good for precious metals for a long time. Even if the markets still react hesitantly, the next rally in gold and silver should be imminent. Large companies like Kinross and Endeavour offer opportunities. But higher returns - with higher risk - are only available from exploration and development companies. Here, Troilus Gold is most certainly a good option.