15. September 2021 | 13:04 CET
Steinhoff, Sierra Grande Minerals, Barrick Gold - Played into the cards
The latest inflation data in the world's largest economy, the USA, plays into the central bank's strategy cards. After 5.4% in the previous month, the inflation rate weakened moderately to 5.3% in August, breaking the trend that had been rising for months for the first time. The FED, which sees the hype in the inflation curve as temporary due to the recovery after the Corona Crisis, thus feels vindicated and continues its ultra-loose monetary policy with bond purchases of USD 120 billion per month in favor of growth.
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ISIN: STEINHOFF INT.HLDG.EO-_50 | NL0011375019 , Sierra Grande Minerals | CA82631L1085 , BARRICK GOLD CORP. | CA0679011084
"[...] The processes in Namibia are predictable and the country itself is very safe. [...]" Heye Daun, President and CEO, Osino Resources Corp.
Profiteers equities and precious metals
Low nominal interest rates and rising inflation mean a creeping loss of purchasing power for savers and thus a decline in the value of their hard-earned money. Historically "safe havens" such as German government bonds now function only to a limited extent and at best only in the short term when real interest rates are negative. In the case of equities, the years-long flood of liquidity from many central banks has led to enormous inflows of capital and thus significantly rising valuations, making many companies simply too expensive. In contrast, on an everyday basis, an investment in precious metals such as gold and silver is attractive. The gold price has corrected from its highs of over USD 2,060 per ounce to a current level of USD 1,800. In addition to physical gold, stocks of gold producers or exploration companies also appear attractive as portfolio additions in the long term.
In the best company
An investment in explorers that are still at the beginning of their development offers a higher risk but significantly greater opportunities. The Canadian Company Sierra Grande Minerals, which maintains its deposits along the Walker Lane trend, historically known as high-grade in the first-class mining region of Nevada, has the best prerequisites. Nevada is the largest gold producer in the United States, producing over 4.9 million ounces in 2019. Industry giants such as Barrick Gold, Newmont, Kinross, SSR, Hecla and Coeur are digging for precious metals not far from Sierra Grande Minerals' 3 mineral projects, which total 1207 ha in size.
A total of 1,805 soil geochemical samples have been taken over the past few months at Glitra, BC Springs and Betty East at intervals of 50m to 100m. A promising north-northeast trending mineralized and altered zone over 1km long has been identified at Glitra. An additional 77 claims staked increase the Glitra property by a factor of five. Recent laboratory results for the Betty East prospect area have come back no less promising.
Betty East is located near the southern end of the Manhattan mining district, immediately north of Huntsman's Baxter Springs exploration project and less than 20 km south along strike from Kinross Gold's world-class Round Mountain mine. The results confirm that gold-bearing structures are present in The Knolls trend. However, perhaps the most exciting aspect is the broad, apparently east-northeast striking multi-element soil geochemical anomaly.
Over the next few months, the Company intends to capture the characteristics and full extent of the broad multi-element soil geochemical anomaly northeast of The Knolls, initially through mapping, prospecting, the collection of rock samples and possibly further soil geochemical sampling. In addition, Sierra Grande Minerals' highly experienced management is evaluating the acquisition of additional exploration projects in Nevada to position itself as a regional land package owner. The stock market value is currently only CAD 4 million. If soil sample results provide further surprises, this is likely to change quickly.
Steinhoff fills the settlement coffers
Things look promising, at least as far as the settlement process at Steinhoff is concerned. All creditors' meetings have signaled their approval of the multi-billion settlement offer. Only the formal approval of the Amsterdam District Court on September 16, 2021, is missing for the Dutch creditors' meeting's voting result. The Company now urgently needed money to fill the settlement fund, and Steinhoff raised this virtually overnight by selling a total of 370 million Pepkor shares to institutional investors. The discount of the Pepkor shares amounted to 9% to the closing price of ZAR 19.75. In total, this brought EUR 400 million into the coffers.
The settlement is likely to go through, but the Company's continued existence is by no means secured due to the accumulated mountain of debt. For this reason, Steinhoff is not a buy in the long term and is only suitable for gamblers.
Gold is historically considered a hedge against inflation and is an attractive long-term investment at current levels. In addition to gold producers such as Barrick Gold, exploration companies such as Sierra Grande Minerals offer high potential but also have an increased risk. There is also a risk with Steinhoff despite a possible favorable settlement.