19. January 2021 | 10:19 CET
Sibanye-Stillwater, Desert Gold Ventures, Barrick Gold - Take advantage of the consolidation to enter quickly!
When the broad stock market is bullish and the prices of cryptocurrencies go through the roof, it is expected that crisis-proof investments stagnate or fall. Such has been the case with gold recently. But even if the bull market feeds the bull market, a stock market correction is inevitable. Corona and central bank policies' economic scars are too massive to be ignored in the long run. Profiteers from this new reality will undoubtedly be precious metals prices. Those who have fair quality shares of gold producers or gold explorers in their portfolio will outperform the gold price. We present three promising players, where an engagement in the current gold price consolidation will pay off.
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ISIN: CA25039N4084 , ZAE000259701 , CA0679011084
"[...] 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
SIBANYE-STILLWATER LIMITED - a clear buy
Sibanye-Stillwater, based near Johannesburg, is South Africa's leading producer of gold and precious metals and is also one of the world's largest players. The Group operates a total of 10 mines, 8 of which are located in South Africa and 2 in the USA. The Group holds a strong platinum and palladium position, with their combined production accounting for almost 40% of the Group's sales. Analysts estimate Sibanye-Stillwater's revenues at USD 7.9 billion in the past fiscal year and USD 9.9 billion in the current year.
Even more intriguing is a look at earnings forecasts and company valuations. For 2020, the average expectation of the experts is a consolidated profit of USD 1.7 billion. In 2021, this is expected to increase by over 70% to USD 3 billion, resulting in a low 2021 P/E ratio of 4!
While the stock has had a phenomenal performance in recent months, the signs still point to growth. Sibanye-Stillwater's strong market position lends security. Also, a very favorable Company valuation allows only one conclusion: Buy. This opinion is also shared by the majority of the 11 analysts who rate the share and calculate an upside potential of 23%.
DESERT GOLD VENTURES INC - waiting for exploration results
The second company we are looking at is also active in the African mining sector. Desert Gold Ventures Inc. is a gold exploration and development company focused on two projects in Mali. The 1.2 million sq km West African nation is one of the continent's top 5 gold producers.
At the core of the portfolio are two gold exploration permits with large land areas: the SMSZ project and the Djimbala project. A few weeks ago, the joint venture partner, Indigo Exploration, in which Desert Gold also holds an interest, announced that they had started exploration work at the Djimbala Gold Project. The Djimbala Gold Project impresses with its sheer size of 100 sq km. The project's proximity to active producing mines is already a positive.
In the summer, when the share reached a high of CAD 0.35, a consolidation phase set in. At the current price level of CAD 0.15, Desert Gold is valued at only CAD 21 million. As soon as new information about the ongoing exploration program is released, the chances of returning to the summer high are good.
BARRICK GOLD CORPORATION - solid spot landing
Last week, Barrick Gold reported production data for the past fiscal year, meeting previously formulated gold and copper output forecasts. Barrick operates in 13 countries worldwide, particularly in North and South America, and Africa. The portfolio includes many of the world's most prolific gold districts and includes several copper projects.
In 2020, a total of 4.8 million ounces of gold were produced, hitting the Group precisely in the middle of the forecast range of 4.6 to 5.0 million ounces of gold. In terms of copper production, 457 million pounds' production volume was at the lower end of the spectrum. On February 18 the Group will release more details on Q4 and the past fiscal year.
Barrick Gold is the second-largest gold producer in the world. If you believe in a gold price rise, you can't avoid the stock as a fundamental investment. Analysts are optimistic and believe that the share price will increase by 32%.