May 31st, 2021 | 09:29 CEST
Steinhoff, Osino Resources, Barrick Gold - From gambler stocks to gold pearls
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"[...] 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
Steinhoff - It remains exciting
For months, the question has been discussed whether Steinhoff will succeed in putting the accounting scandal behind it, which almost brought the Company down. The Company is still in the process of restructuring, and accounting freedoms are being used very cleverly. The Pepco investment was successfully placed on the Warsaw Stock Exchange and floated. In addition to proceeds of around EUR 900 million, the value of the investment in Steinhoff's books was significantly adjusted upward.
Another important role in the settlement negotiations with creditors is the subsidiary Pepkor, which covers 50% of the receivables. In April, a real estate deal between Steinhoff International Holding and Pepkor was rubber-stamped, with Steinhoff reporting a bottom-line book gain of about 50% on the previous Pepkor valuation. Pepkor's numbers were substantial in both revenue, +8.1%, and operating profit, +18.5%.
Shareholders are currently waiting for June 4, when the court in Amsterdam will address the Hamilton and Lancaster motions. Steinhoff, therefore, remains a hot bet that should only be taken by very speculative investors. If Steinhoff gets back on its feet, larger price jumps beckon, but a total loss is also possible.
Osino Resources - Great potential
Osino Resources is led by an experienced management team that sold the then Namibia project Auryx Gold to B2 Gold for USD 160 million in 2011. The new project area is 6,577 km² and the current main project is named Twin Hills. It is located north of the country's capital and benefits from good infrastructure and a mining-friendly government.
Following the initial discoveries at Twin Hills, accelerated project development was decided for 2021, as there are already two producing gold mines nearby. On May 26, the Company announced that 32,893m of 42,000m of in-fill holes have already been drilled. Of the planned 25,000m of exploration drilling, 17,889m has already been completed. Gold up to 2.66g per ton has been detected. More than 130 assay results are still pending and these should be available in two months at the latest.
The Company has a large exploration pipeline, and Twin Hills is just the beginning. The shareholder structure can also be seen as a plus: 34% are in institutional hands, 38% are held by insiders and only 28% by retailers. In addition, the gold price is currently rising. Anyone who wants to invest in gold is certainly in good hands here in the long term.
Barrick Gold - Profits from high commodity prices
Barrick Gold, one of the world's largest gold producers, announced its first-quarter 2021 results on May 5. The Company increased its profit by 78%. Revenue for the first quarter was nearly USD 2.96 billion, an increase of 8.8%. Due to high gold and copper prices, January-March 2021 net income was USD 507 million, up from USD 285 million year-on-year.
Gold production declined 12% to 1.1 million ounces. Despite this, production targets for 2021 are expected to be met. The Company improved on many ESG metrics and the Porgera project may resume operations. There were also some promising drill results from the exploration program.
As icing on the cake, in addition to a quarterly dividend of USD 0.09, shareholders will receive one-third of the USD 750 million capital return distribution of USD 0.14 per share. The record date for receiving this special distribution was May 28. Barrick Gold's stock has broken the downward trend of consolidation and will certainly see higher prices as gold and copper prices rise.
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