Newmont, Royal Helium, Anglo American - Commodities on the rise

Newmont Corp. - Significant increase

Following a decline in the results of the world's largest gold producer in recent quarters, the Company from Denver, Colorado, shone last week with an enormous increase in profits. As a result, the share price rose by around 15% week-on-week and reached a new high for the year of USD 42.73. Having overcome horizontal resistance, the next price target is now USD 45.92, the high from July last year.

In the last financial quarter, operating profit rose by 70% year-on-year to USD 1.69 billion. This was offset by a 32% increase in gold production. Earnings per share improved from USD 0.40 to USD 0.55. A significant factor in this jump in earnings is the higher gold price, which climbed from USD 1,906 to USD 2,090 per ounce on the reporting date. At the same time, production costs rose by only 5%, which enabled the Company to realize a higher profit per ounce than in the previous year.

Newmont fully reinvested the increased earnings in forward-looking investments. Although this led to a negative cash flow for the past quarter, the Company is counting on a rising revenue and profit curve with increased production volumes.

Royal Helium - Opportunities after the share price slide

The exploration, production and infrastructure company Royal Helium, which focuses on the development and production of helium and associated gases, could offer a disproportionately high but speculative entry opportunity at the current level. Given the current and foreseeable global undersupply of this critical and non-renewable product, the Canadians are ideally positioned to become a leading North American producer of this increasingly valuable commodity.

In recent weeks, the announcement that Royal Helium, on behalf of a consortium of underwriters, had entered into an agreement to acquire 66,667,000 units of the Company on a buy-deal basis at a price of CAD 0.09 per unit resulted in a sell-off. This transaction brings the Company gross proceeds of a total of CAD 6,000,030 million. The net proceeds will be used for new drilling at the 40 Mile project in southern Alberta, for the development of the Helium Corridor in Saskatchewan, for the completion and testing of an existing discovery at the Ogema project, and for working capital and general corporate purposes.

Royal Helium controls more than 4,000 sq km of concessions in Saskatchewan and Alberta. It was also recently announced that Royal Helium has entered into a CAD 25 million joint venture with Sparrow Hawk Developments for resource development and construction of a new facility for the Val Marie helium project in Saskatchewan. The helium producer's market capitalization is currently CAD 22.62 million.

Anglo American - Offer rejected

The price of copper is currently performing even better than the precious metals gold and silver, rising by almost 20% to USD 9,852.69 per ton since the beginning of the year. This is also the highest level since May 2022. Despite the weakening economy, experts see a supply deficit that could widen further in the coming years. The consulting firm McKinsey, for example, sees an annual supply shortfall of one million tons, while the yearly supply produced is only likely to be around 31 million tons.

The news that the BHP Group surprisingly submitted a non-binding takeover bid of EUR 36 billion for the purchase of Anglo American, which the London-based company thankfully rejected, at least for the time being, fits into the picture of a further increase in the base price. The purchase of BHP would have been conditional on Anglo American divesting its interests in Anglo American Platinum and Kumba Iron Ore, which suggests that BHP has placed its main focus on the copper division. Copper production of between 730,000 and 790,000 tons is planned for the current year.

The news from Bloomberg confirms that the last word has not yet been spoken and that the raw materials company will likely remain a hot takeover target. According to the report, the hedge fund Elliott acquired a package worth around USD 1 billion in Anglo American. Elliott has also held a stake in the BHP Group for years.

The world's largest gold producer, Newmont, celebrated a 70% increase in profits in the past quarter. Anglo American remains a hot takeover candidate despite the rejection of the BHP Group's offer. Royal Helium is well positioned for the expected further boom in demand for helium and offers an interesting entry opportunity at a reduced level.