December 29th, 2021 | 07:43 CET
Steinhoff, Troilus Gold, Agnico Eagle - The final sprint is underway
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"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
Agnico Eagle - The analysts' favorite
Interest rates remain at historically low levels. The horrendously growing national debt and the rising inflation data are also historic. These three key figures make every gold bull sit up and take notice, as these are the cornerstone for new highs above USD 2,000 per ounce for the year 2022. Meanwhile, a collapsing financial system is seen by the crash prophets, in whose community prices between USD 5,000 and even quotations in the five-digit range are already being passed around.
The chart technicians are also positive for the precious metal in the long term. Before a long-term bull market is likely to occur, which should bring prices beyond USD 2,400 per ounce, the followers of the Elliot Wave Theory, in particular, see another downward wave in the range between USD 1,500 and 1,620.
There is also disagreement in the analyst community. Credit Suisse, for example, sees the gold price at USD 1,850 per ounce in 2022. In a recent report provided on the US website www.kitco.com, Fahad Tariq, precious metals analyst at the major Swiss bank, expressed optimism for the yellow metal, even if the Federal Reserve is preparing to raise interest rates. However, the expert does not expect gold prices to remain above pre-pandemic levels in the long term. According to Tariq, Credit Suisse expects gold prices to average around USD 1,850 per ounce. By 2023, the bank expects gold prices to fall to USD 1,600 and sees long-term prices at around USD 1,400 per ounce.
Even with gold prices in the USD 1,850 range, the analyst still sees mining stocks as an attractive investment. "Despite the decline in gold prices from a record of over USD 2,000 per ounce in August 2020 to around USD 1,770 per ounce, the gold sector remains fundamentally sound with strong balance sheets," the analyst comments.
Credit Suisse considers Agnico Eagle its top pick in the mining sector. After merging with Kirkland Lake, the Company became the world's third-largest gold producer. "We see Agnico Eagle as the highest-quality gold producer post-merger, with the lowest costs and scope for a significantly higher dividend." According to Credit Suisse, other top picks in the mining sector include Barrick Gold, Endeavour Mining, Kinross, Newmont, Triple Flag Precious Metals, and Yamana.
Troilus Gold - Top pick from the second row
Gold exploration company Troilus Gold hasn't quite made it onto Credit Suisse's list, but several analyst firms are enthusiastic about its recent results. Laurentian Bank Securities assigned a "buy" rating with a price target of CAD 3.30, and the analysts at Stifel also see a buy candidate with a target of CAD 4.00. For some time now, Troilus has been on the list as a top pick at Cormark Securities with a price target of CAD 4.50. With a stock exchange price of CAD 0.75 thus according to the experts, a course potential of at least 300% offers itself.
The share price should grow wings at the latest when CEO Justin Reid announces the resource estimate for 2022 and the results of a pre-feasibility study. The market capitalization of the Canadians, who want to become a gold producer by the end of 2023 at the latest, is a manageable EUR 101.59 million. In addition to the Troilus mine, the infrastructure taken over in 2017 is estimated at around EUR 246 million, which alone more than doubles the market capitalization. In addition, Troilus Gold is expanding drilling by another 12,000m per month.
The last value study confirmed in 2020 produced 8.1 million ounces of gold equivalent, approximately 85% gold and 15% copper, with a total valuation of approximately EUR 1.33 billion. At that time, the gold price was around USD 1,750 per ounce.
Steinhoff - The place to be
There is no stopping the share of the German-South African trading group Steinhoff at the end of the year. After lows around the 10 cents mark at the end of November, the share price almost tripled. The reason is that the distressed Company was able to satisfy the last claimants.
After the success of the settlement with the former Tekkie Town owners and Trevo Capital, the only thing missing now was the consent of the bondholders, who had to waive part of the liability mass. These have now agreed for the benefit of the continued existence of the Steinhoff Group. The Western Cape High Court will now hear arguments in favor of accepting the main settlement on January 24. The new settlements for Tekkie Town and Trevo will only come into effect if the court approves the settlement. However, this should only be a formality.
As a result, the settlement is likely to be finalized. In contrast, Steinhoff will continue to struggle with its high debt burden. After the strong price gains, profit-taking would not be the worst course of action following the good news.
What will happen in 2022? Opinions are divided on both the stock market and precious metals. Credit Suisse analysts still see mining stocks as an attractive investment despite an expected price of around USD 1,850. In addition to Agnico Eagle and Barrick Gold, several houses are bullish on exploration Company Troilus Gold. With Steinhoff, profit-taking is not the worst choice.
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