September 15th, 2022 | 11:23 CEST
Nordex, Rheinmetall, Barsele Minerals: Turnaround potential!
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"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Barsele Minerals: Will partner Agnico Eagle increase its stake soon?
The gold price is struggling with the USD 1,700 mark. The latest inflation figures from the US speak for rising interest rates and cause trouble for the "interest-free" gold. The high inflation speaks for an investment in gold - just like the rapidly increasing national debt in the US, Germany and numerous other economic nations. But this is currently largely ignored by the capital market - for the time being. Therefore, there is much to be said for physical gold and gold producers as portfolio additions. Exploration companies, in particular, have lost a disproportionately large amount of ground and currently appear correspondingly cheap. Barsele Minerals is one of these companies.
The Canadians have a 45% stake in the Barsele Gold project in Sweden. Compared with competitors in Eastern Europe, Africa and Asia, this significantly reduces the political risks and correspondingly increases the value of the project. The remaining 55% is owned by Agnico Eagle. The minority shareholding brings advantages for Barsele Minerals - on the cost and risk side, for example, the billion-dollar group Agnico Eagle as operator bears the costs. The Barsele Gold Project is located 600 km north of Stockholm. There are several large gold deposits nearby, including Bjorkdal (Elgin Mining), Faboliden (Dragon Mining) and Svartliden (Dragon Mining). In recent years, 404 drill holes totaling over 155,000m have already been drilled at the Barsele project, and gold resources are estimated at 2.4 million ounces. In addition, metals such as lead, zinc and nickel have also been proven. Further drilling is currently taking place to increase the resource estimate to 3.5 million ounces of gold. Should this succeed, an increase in the shareholding or complete takeover by Agnico would be plausible. Investors see this in a similar light and made a strong grab in the recent capital measure. In order to finance the pro-rata obligations, Barsele Minerals wanted to raise CAD 1 million through a capital increase. Due to the high demand, the transaction was oversubscribed and flushed CAD 1.9 million into the Company's coffers. Barsele Minerals is valued at around CAD 40 million on the stock exchange. With a resource estimate of 3.5 million ounces of gold, the value of the investment is likely to be significantly higher.
Nordex: Target price EUR 13
Billions in subsidies for renewable energies are being approved worldwide. Yet, the Nordex share is trading over 60% below its 5-year high from 2021. The reason: the wind turbine manufacturer is not getting a grip on its operational problems. Nordex is now a small player in the industry and has focused on land-based turbines. Plant closures have not had any positive effects so far. At the same time, the Company suffers from high procurement costs and problems in the supply chains. The analysts at Jefferies see the latter as a trigger for a buy on the stock. In a study on stocks from the German-speaking region, Nordex is one of the preferred stocks. In addition to the fundamentally positive industry environment, investors in Nordex could speculate on an end to the problems in global supply chains. Therefore, the analysts recommend the Nordex share as a buy with a price target of EUR 13. Currently, the stock is trading just above EUR 9.
Rheinmetall: Goldman Sachs sees a price potential of more than 70%
Due to the ongoing geopolitical tensions since the beginning of Russia's attack on Ukraine and the tensions between China and Taiwan, the arms industry is again the focus of investors. Nevertheless, Rheinmetall's stock has lost over 30% of its value in recent weeks and is now trading at only around EUR 150. Too low? Because even if there is peace between Ukraine and Russia - for which there are currently no signs - the armament of the EU and other countries will hardly stop. Goldman Sachs probably also sees it that way. Therefore, the buy recommendation was renewed with a price target of EUR 263. The analysts thus see a price potential of over 70%. Operationally, Rheinmetall has been relatively quiet in recent weeks. After proudly unveiling the new "Panther" battle tank in the summer, the Company has been in the doldrums for some time. According to reports, countries in Eastern Europe have already shown interest. However, there has been no concrete news on this since then. The delivery of refurbished Marder infantry fighting vehicles is still awaiting the necessary approvals. According to its own information, Rheinmetall already has 16 Marder vehicles ready for delivery. Another 14 infantry fighting vehicles are currently being refurbished. In addition, 70 more Marder could be reactivated from old stocks. However, as is well known, the German government is undecided on this issue.
All three shares offer arguments for an entry. Barsele Minerals is certainly speculative, but the valuation is now probably below the value of the Barsele stake. Rheinmetall will benefit from rising defense spending in the long term. At Nordex, an easing on the purchasing side would positively surprise investors.
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