10. September 2021 | 13:50 CET
Sierra Grande Minerals, Barrick Gold, Sibanye Stillwater - Tempting valuation levels
Patience is a virtue. Especially on the stock market, investors are often required to be patient. Why do rising prices take so long to materialize, even though the relevant facts are already on the table? One or the other investor who has invested in commodity shares has undoubtedly experienced this or a similar situation. But those who take a longer-term view and make the proper sense of the relevant framework conditions that determine supply and demand will be successful. Precious metals have proven to be a protection against inflation over long periods of time. Various raw materials such as copper and lithium are experiencing rising demand as a result of electromobility. These three stocks offer opportunities.
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ISIN: Sierra Grande Minerals | CA82631L1085 , BARRICK GOLD CORP. | CA0679011084 , SIBANYE STILLWATER LTD. | ZAE000259701
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
SIERRA GRANDE MINERALS INC - Geochemical soil sample results published
Based in the Canadian province of British Columbia, the Company specializes in the exploration of gold, silver, copper and molybdenum projects in their absolute early stages. In the past, the Company focused on two regions: the US state of Nevada and Peru. With the sale of exploration rights for two properties in the Andean state, the Company now operates exclusively in the USA.
In the "Silver State" of Nevada, Sierra is currently exploring the three projects Glitra/Sat, Mildred/B&C Springs and Betty East, all of which are located on the Walker Lane Trend, which is historically known to be high grade. The collection of 1,805 soil geochemical samples at 50m to 100m intervals was completed in late May. The results are now available.
At Glitra, a prospective north-northeast trending mineralized and altered zone over 1km long has been identified, ranging in width from 150m to 200m. Consistently high gold-in-soil results were noted along the north-northeast trend. An additional 77 claims were staked by Sierra along this trend, increasing the size of the Glitra property by a factor of five. Sat also delivered encouraging results. An additional 19 claims were staked, roughly doubling the size of the property.
President and CEO Sonny Janda commented, "The results of our soil sampling programs are very encouraging and demonstrate the potential for exciting discoveries at Glitra/Sat. The subsequent second phase of exploration will include geological mapping, ground-based IP and airborne magnetic surveys and ultimately initial RC drilling to test the most prospective of these targets. In addition, we look forward to releasing the results of the ground geochemical surveys from our other two projects, B&C Springs and Betty East, as they become available."
Further project progress could significantly move the share price, which is also traded in Frankfurt, at any time. The Company currently has a market capitalization of only about CAD 4 million.
BARRICK GOLD CORPORATION - Gold price trumps dividend policy
The share of the world's second-largest gold producer could not escape the slide of gold below the USD 1,800 mark. It does not help that the Canadians, valued at CAD 44 billion, recently paid a special dividend of CAD 0.14 per share in addition to a quarterly dividend of CAD 0.09 per share. However, recent newsflow underscores its strong position as one of the industry's top dogs.
Nevada Gold Mines (NGM) recently entered into a definitive asset swap agreement to acquire from i-80 Gold Corp. the 40% interest in the South Arturo joint venture and a low-cost option to acquire the adjacent Rodeo Creek exploration property in exchange for the Lone Tree and Buffalo Mountain properties and infrastructure currently under care and maintenance. Nevada Gold Mines is a joint venture between Barrick and Newmont. Barrick holds a 61.5% majority interest, with Newmont holding the remaining shares. NGM was formed in 2019 with the contribution of significant assets in the US state of Nevada with no less a goal than to create the largest gold production complex in the world.
SIBANYE STILLWATER LIMITED - 2022 P/E ratio of 3.7 and 10% dividend yield
The South African stock is among the cheapest precious metals producers in the world. Despite recently reporting record first-half results, the share price is crumbling. Improved operating performance, combined with significantly higher commodity prices, led to a 160% increase in net income to USD 1.74 billion. Basic earnings per share were USD 0.58.
In presenting its figures, the group reiterated its strategy to build an operating portfolio of green energy metals and related technologies alongside its established business. So far, the South African Company has mainly produced gold and platinum group metals. Valued at USD 10.8 billion, the Company has a 2022 P/E of just 3.7 and a dividend yield of around 10%. The launched share buyback program has not given the share price any positive impetus so far.
Patient investors should find attractive investments among the shares presented. Barrick is the world's second-largest gold producer and benefits from higher precious metal prices. Sibanye is also a heavyweight with an extremely low company valuation. Those looking to participate in the growth of a fledgling company with good project quality should consider Sierra Grande Minerals. The Canadians are valued at only CAD 4 million.