October 28th, 2021 | 11:26 CEST
MAS Gold, Barrick Gold, Yamana Gold - Go for gold!
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
MAS Gold - When will the countermovement come?
The Company is primarily focused on gold exploration in Saskatchewan. The focus is on the La Ronge South gold joint venture and exploration of the Greywacke, Preview Lake and North Lake properties. The Greywacke property is located approximately 80 kilometers northeast of La Ronge, with a total area of 5,786 hectares.
The Company also owns interests in Henry Lake and Little Deer Lake. The La Ronge Gold Belt has geology similar to rich gold mining areas in West Africa. MAS Gold is pursuing a hub-and-spoke model. That means all of the smaller projects will be connected to a central processing plant.
The Preview Lake property covers an area of 10,041 hectares. The North Lake gold deposit is located about five kilometers north of Point Prospect and about 24 kilometers south of Golden Band's abandoned Roy Lloyd mine. The Company's goal is to report a resource estimate of 1 million ounces of gold soon.
MAS Gold, which recently completed a mini-capital increase of just under CAD 40,000, is valued at about CAD 16 million. Project progress and rising precious metal prices should give the shares a tailwind in the medium term. The share has more than halved since the course high in 2021.
Barrick Gold - Strong position
Barrick benefits from higher gold prices and production volumes. The group reports high profits and lets its shareholders benefit with a special dividend. Analysts forecast high net cash balances in the coming fiscal years. As the guidance for 2021 shows, production is expected to increase noticeably in the year's second half. The multi-year outlook of the Canadians is valued at around 4.7 million ounces of gold p.a. Thus, the gold price level is a decisive factor.
The bottom line is that the current price level of the Barrick share is an attractive entry opportunity for long-term oriented investors. First and foremost, it is the plausible assumption of a rising gold price. The Canadians also generate just under 10% of sales from copper production. The industrial metal price should have a margin-increasing effect for the Company due to strong demand from the electromobility sector. In addition, Barrick has sufficient financial resources for acquisitions. The stock has catch-up potential compared to the industry and the most prominent player Newmont. On average, analysts formulate a price target of CAD 35 for the title.
Yamana Gold - Analysts: 63% upside potential!
The Canadian precious metals producer has gold and silver production, exploration properties and land positions across the Americas. Its properties include Canadian Malartic, Jacobina, Cerro Moro, El Penon, Minera Florida, Wasamac and Camflo. Soon, the Company will break the sound barrier of producing 1 million ounces of gold annually. Most of the production growth is expected to come from the advanced Wasamac project.
The underground mine is located west of Canada's Malartic mine and has a resource estimate of 1.9 million ounces of gold on a proven and probable basis at a grade of 2.56 g/t. Production in the first four years is estimated at 200,000 ounces of gold and then averages 169,000 ounces of gold for the remainder of the mine's life, which is estimated to be 15 years in total.
The fundamentals favor the shares of the Company, which is currently valued at CAD 4.2 billion. The Canadians are valued at about 2.3 times sales for 2021 as well as 2022. According to analyst consensus, the 2022 P/E ratio is currently 12. The experts predominantly recommend buying the stock and see an upside potential of 63%.
Tangible assets offer inflation protection. Even if interest rates should rise, past periods have shown that the precious metal can gain in such an environment if inflation rises more than interest rates. Thus, the price of gold should rise in the medium term, which should benefit gold producers such as Barrick and Yamana. Those who like it a bit more speculative can bet on a leveraged gold price increase with exploration companies like MAS Gold.
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