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April 14th, 2023 | 10:38 CEST

Opportunity-oriented investing: Barrick Gold, Canadian North Resources, Steinhoff

  • Mining
  • Gold
  • Lithium
  • Commodities
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Inflation in the US is rising less quickly than expected - but what is the gold price doing? It remains at a high level. The reason is that the situation in many currency areas remains tense. The Eurozone, for example, is still far from inflation rates with a five before the decimal point. Investors should therefore continue to keep gold and commodities on their radar. We show which investments could be worthwhile.

time to read: 3 minutes | Author: Nico Popp

Table of contents:

    Nick Mather, CEO, SolGold PLC
    "[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC

    Full interview


    Barrick Gold: No experiments

    During the past four weeks alone, the stock of Barrick Gold has increased by around 11%. The reason is likely the gold price, which has settled above the USD 2,000 mark. The Barrick Gold share has always been a popular alternative to direct investments in the precious metal. The Company is active worldwide and mines gold at attractive costs. If the gold price rises, the margins for companies like Barrick climb. In addition to its involvement in precious metals, the Company is increasingly focusing on the copper business. Another plus point for Barrick Gold's stock is its shareholder-friendly dividend policy. The share currently offers a dividend yield of more than 3%. In difficult times, Barrick doubled its payout last year. At that time, high energy costs were the main burden. Today, this situation has eased, and profits are likely to increase again, thanks to higher gold prices.

    Although Barrick Gold is increasingly associated with the copper business, the name still says it all: the Company makes almost 90% of its sales with the precious yellow metal. Since the Company also has a clear ESG roadmap and aims to reduce emissions by 30% by 2030 and 0% by 2050, Barrick's stock remains a solid underlying investment. However, the fact that the share does not go through the roof when gold rises is also obvious: big surprises are usually absent from global commodity companies.

    Canadian North Resources: The solid among the speculators

    The share of Canadian North Resources, on the other hand, offers much more room for surprises. The Company sees itself as an advanced explorer and mine developer and shines with its Ferguson Lake project in northern Canada. Neighbours include Agnico Eagle, with two projects, and the French Orano Group. K2 Gold and De Beers operate somewhat further away. Canadian North Resources explores a total of 156.9 sq km and has deposits of copper, nickel, cobalt, platinum and palladium according to Canadian mining standards. Compared to companies like Barrick Gold, Canadian North offers a broader commodity mix but operates only one flagship project.

    The combination of the current stage of development and the focus on one project means that the market currently values Canadian North Resources' shares at only CAD 260 million. By comparison, the exploration of the property alone has so far cost more than CAD 160 million. In addition, there is an intact infrastructure, further drilling and a loyal investor base - only a little more than a quarter of the shares are in free float. In early April, Canadian North Resources announced a further 20,000m drilling programme. "We will continue to focus on drill testing high-grade base metal and PGM targets along the 15km Main Mineralized Horizon to expand and upgrade mineral resources. In addition, we will investigate the lithium potential of the extensively exposed pegmatites identified on the Ferguson Lake property," says Kaihui Yang, the Company's President and CEO. Lithium could soon be added to the already extensive resource mix. The share price has risen recently. If the new drillings bring good results to light and if commodity prices develop as they have recently, the shares of Canadian North Resources should also have further potential.

    Steinhoff: We have always written it

    The share of Steinhoff also looks cheap at the moment - the share of the furniture manufacturer from South Africa only costs about one cent. But a distressed company is not a good choice, even at a supposed bargain price. Recently, executives have left, and there is also talk of a restructuring under Dutch law. We already warned against the share at prices above 20 cents. Those blinded by supposed bargains could experience a rude awakening with a total loss.

    Those who want to invest speculatively should focus on more than just valuations. More importantly, a company should be on a secure growth path. For years, Steinhoff has been associated only with legal disputes and conflicts between creditors, management, and shareholders. In contrast, the situation is different with Canadian North Resources. Here, an experienced management team with committed anchor shareholders is implementing a long-term plan. At the same time, commodities are becoming more expensive. With these conditions, it may be worthwhile for investors to take a slightly higher risk compared to companies like Barrick Gold.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author

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