March 1st, 2022 | 11:40 CET
Nordex, Rheinmetall, Triumph Gold: Russia crisis causes price swings
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"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
Triumph Gold: The turnaround now after drill results?
The gold price traded around USD 16 higher at times on Monday and broke away from the USD 1,900 mark. Thus, the USD 2,000 no longer seems impossible. Even if the gold price is currently strongly driven by the news - both positive and negative - from Ukraine, one thing is certain: the world has changed a lot in recent days, and security will remain more important. This also applies to investments and speaks for a rising gold price. In addition to the industry giants such as Barrick Gold, younger exploration companies should also benefit. Among them is the Canadian Triumph Gold.
Triumph currently focuses on the Freegold Mountain project in the mining-friendly Yukon region. The area covers 200 sq km and is located in the Dawson Range copper-gold belt. Recently, the Company announced the completion of a 19-hole, 6,615m diamond drilling program on the Freegold Mountain property in the Nucleus and Revenue areas. Ahead of the campaign, the Company had completed an extensive study in conjunction with Minerva Intelligence. The analysis, conducted with the support of artificial intelligence, indicated new gold and copper mineralization. In February, the Canadians presented encouraging drill results at the Nucleus deposit. Highlights included 4.5m of 2.00 g/t gold and 1.57 g/t silver within 46.28m of 0.54 g/t gold and 0.53 g/t silver at N21-02 in the oxide zone, which returned a gold recovery rate of 83%. Triumph Gold CEO Brian May was pleased with the results confirming considerable oxide gold mineralization at the Nucleus deposit, "The cyanide solubility results indicating suitability for heap leach mining methods are extremely encouraging. We look forward to defining additional oxide gold zones at Freegold Mountain." Despite yesterday's rally, the stock, also listed in Frankfurt, is valued at less than EUR 10 million.
Nordex: Investors speculate on revaluation
Over the weekend, Finance Minister Lindner referred to renewables as "freedom energies." The intention is to make it clear that the expansion of energy from renewable sources is to be accelerated once again. Accordingly, "green" shares such as Nel, Plug Power, SMA Solar, Siemens Gamesa, and Nordex were in demand on Monday. The Nordex share led the price gainers in the TecDAX. The stock is driven by the hope that wind energy will be pushed and bureaucracy reduced. Investors are thus speculating on a revaluation, as there has been little positive from Nordex in recent weeks. Most recently, it became known that the wind turbine manufacturer is examining the future of its Rostock production sites. This is because the Company is struggling with rising costs. At least the analysts at Jeffries advised buying the stock in mid-February. They said the wind turbine manufacturer is 1 of the top 3 in turbines on land. Because of strong order backlogs, the analysts considered the consensus estimates too low. Nordex should return to profitability in 2023. Jeffries' price target for the Nordex share is EUR 20.
The defense sector is probably also facing a revaluation. Chancellor Scholz announced that the German armed forces are to receive EUR 100 billion as special assets and that Germany will participate in arms deliveries to Ukraine. In addition, the 2% NATO target is to be met in the future, which marks the beginning of a fundamental reorientation of long-term armaments and security policy. Other European countries are also expected to increase their arms spending in the coming decade significantly. JPMorgan analysts wrote in response: Russia's invasion of Ukraine has fundamentally changed the market environment for the European defense sector. As a result, European defense spending is likely to be much higher in the future than previously expected. Moreover, concerning sustainability criteria, more investors could accept that "defense" is necessary to preserve peace and democracy. Accordingly, the shares of defense companies rose sharply on Monday. The MDAX group Rheinmetall rose by more than 24% to around EUR 132. As a result, the price target for Rheinmetall, which UBS also raised on Monday from EUR 110 to EUR 121, has already been exceeded. The analysts expect that Rheinmetall could boost sales by almost 25% on the back of the German government's plans alone. Other defense groups also made substantial gains on Monday. The shares of defense electronics manufacturer Hensoldt rose by more than 41% and ThyssenKrupp shares by more than 9%.
The world is spinning incredibly fast at the moment. Higher arms spending suddenly finds broad approval among the population and politicians. Green energy is now "freedom energies". Companies like Nordex and Rheinmetall should benefit from this, but investors should not blindly chase the price jumps. Gold will remain the "safe haven," and those who like it a bit more speculative can take a closer look at the Triumph Gold share.
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