February 17th, 2022 | 11:22 CET
Super numbers! Barrick Gold, Desert Gold, First Majestic - The gold and silver rally is coming!
Inflation is a buying time for precious metals - Inflation Protection. The political conflict with Ukraine seems to be slowly dissipating into thin air. But short-term surprises still lurk to drive the price of gold. Due to the pullback that has begun, there has been a slight easing in commodity prices, but the fundamental rally continues. Barrick has reported on 2021. And second-tier stocks are waiting in the wings. Here is a selection of promising gold and silver stocks.
time to read: 4 minutes
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Author:
André Will-Laudien
ISIN:
BARRICK GOLD CORP. | CA0679011084 , DESERT GOLD VENTURES | CA25039N4084 , FIRST MAJESTIC SILVER | CA32076V1031
Table of contents:
"[...] 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
Author
André Will-Laudien
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
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Barrick Gold - Newly published: Solid figures for 2021 and 7% price rally
That is something to be proud of! Barrick Gold today released numbers for 2021. In a nutshell: Net profit 2.02 after USD 2.3 billion delivers EPS of 1.14 after USD 1.31. Gold production reached 4.437 million ounces of gold and 415 million pounds of copper. Even before the press conference with CEO Mark Bristow, the share price was jubilant and up plus 7% to EUR 19.4!
Barrick met its 2021 production guidance for the third consecutive year thanks to solid performances in Africa, the Middle East, and Latin America regions. The Company also reported a high reserve recovery rate due to success in resource recovery and brownfield exploration. Exploration is now being extended to new prospective areas. Among other initiatives, the Company has established a specialized Asia-Pacific team to identify and evaluate opportunities in the region.
The figures in detail: Free cash flow from operations remained robust, with year-end net cash of USD 130 million after the record USD 1.4 billion distribution to shareholders. The fourth-quarter dividend was increased 11% to 10 cents per share. Under the Company's new dividend policy, the base dividend will henceforth be coupled with a performance dividend linked to net balance sheet liquidity. Barrick reported adjusted earnings per share for the quarter of USD 0.35, while the analyst community had expected only USD 0.30.
Furthermore, the board approved a share buyback program of up to USD 1 billion, as the stock is considered too cheap. The merger with Randgold created industry-leading value. CEO Mark Bristow comments, "By any measure, Barrick is clearly the leader in its sector. We have undoubtedly the best asset base with six Tier 1 mines and more waiting in the wings. We have a long track record of exploration and a high-quality target pipeline. In an industry that is running out of commodities, we continue to build our reserves."
In addition to the potential for further exploration success, the Company is advancing its pipeline of large growth projects, including Donlin Gold, Pascua-Lama and Norte Abierto. The numbers are ahead of expectations: Stock up!
Desert Gold Ventures - With further drilling into the new year
Desert Gold Ventures stock is still a few years away from production. The Canadians' flagship project is the 410 sq km SMSZ project in Mali, near Barrick Gold. After working 20 gold zones on the exploration area, the suspicion is growing that the entire region has much more potential than previously believed due to its geographic peculiarity. Larger producers have cash and are looking for opportunities.
Drill results were updated in January - an additional 72 air core (AC) drill holes were completed in late December 2021 and early January 2022. These holes were drilled to test extensions at Gourbassi West North discovered during the Company's 2021 drill program. Current drilling results indicate that the Gourbassi West North zone can be traced for approximately 1.6 km and is open to the north and south. Additional AC and auger drilling are planned to test the Gourbassi West North zone extensions and delineate potential parallel mineralized structures.
Jared Scharf, President and CEO of Desert Gold, commented, "The Gourbassi West North zone now has an indicative strike length of 1.6 km, making it one of the longest and widest mineralized zones on the property. Gourbassi West North is just one of several high-priority targets the Company will develop at SMSZ this season, which we believe highlights the tremendous potential of this regional project."
With approximately 150 million shares, the Company is currently valued at CAD 36 million. Assuming a 15% appreciation in the gold price to around USD 2,150 in 2022, the upside potential would be 50-100%.
First Majestic - Quarterly record in production output
First Majestic Silver Corp set a new quarterly production record of 8.6 million silver equivalent ounces, consisting of 3.4 million ounces of silver and 67,411 ounces of gold, in Q4. That represents an increase of 17% compared to the previous quarter. In addition, production for the full year 2021 reached a new company record of 26.9 million silver equivalent ounces. These are excellent results despite the pandemic constraints.
Consistently, the 2022 guidance is raised to 32.2 to 35.8 million silver equivalent ounces with a cost guidance of USD 17.79 to USD 18.06 per silver equivalent ounce. At current market prices, this gives the Company a net margin of 32%. In November, the Company began test-dosing surface stockpiles from Ermitaño at the Santa Elena processing plant. The first production was then started as early as December. In addition, there was a successful closing of the acquisition of the Jerritt Canyon gold mine in Nevada, adding a fourth active mine to the Company's portfolio.
First Majestic shares were able to break above the EUR 10 hurdle again after a long period of consolidation. In a 12-month period, the share price had to accept a discount of more than 30%. Technically, the sails are set for new price regions up to EUR 12. If this resistance is overcome, rapid premiums beckon. Keep a close eye on the silver price: Above USD 25, First Majestic is a "Strong Buy".
Investing in gold and silver often requires a long thread of patience. All is well with Barrick Gold and First Majestic Silver operationally; all that is missing is a rising metal price. Desert Gold Ventures is sitting on several promising projects - some success is expected here this year.
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