08. April 2021 | 07:54 CET
ThyssenKrupp, Barrick Gold, Goldseek Resources: These developments are only just beginning
While scarcity used to be expressed only in rising prices on the futures markets, it is now even reaching the shelves of consumer and DIY stores. In the final phase of the pandemic, the long standstill seems to be taking its revenge. While many regions are already becoming more active again economically and are demanding products, empty warehouses and low production capacities are becoming noticeable.
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ISIN: DE0007500001 , CA0679011084 , CA38150J1066
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
ThyssenKrupp achieves turnaround
One stock benefiting from rising metal prices is ThyssenKrupp. The stock gained around 34% in the last three months. In the last fiscal year the Company was still well in the red and for the second year in succession paid no dividend. But the tide is slowly turning - thanks, in particular, to rising raw material prices and the recovering economy. Analysts also stress the growing importance of the hydrogen business for ThyssenKrupp. At the beginning of the year, ThyssenKrupp won a contract for an 88 MW water electrolysis project in Canada. More than 11,000 tons of green hydrogen are to be produced there each year.
In the first quarter the Company already performed significantly better than in the past fiscal year. In particular, the steel business, which had previously been loss-making, made good progress again. At the same time, ThyssenKrupp continued its cost-cutting measures and laid off employees again. These cost-cutting measures did the stock well. Coupled with the better outlook, the stock could be a good alternative in times of rising commodity prices.
Barrick Gold: Where is the fantasy?
When it comes to rising prices, investors also keep thinking about Barrick Gold. The giant gold miner is on the move worldwide and extracts gold from the ground on every continent. For investors, this reduces the risk - after all, geopolitical risks or natural disasters are not as significant in this way. But at the same time, this constellation also ensures that Barrick Gold can hardly break away from the gold price. Where there is hardly any risk, there is also no room for outperformance, and so the price of Barrick Gold sticks to the gold price. In the last three months, the share lost more than 10%. Barrick Gold seems to be protected on the downside for the time being, but for the share price to regain momentum, the gold price must rise more strongly again.
Goldseek Resources: Savings fox with a clear strategy
The situation is different at Goldseek Resources. The small gold developer from Canada operates in the Canadian provinces of Ontario and Quebec, where it is advancing several smaller projects amid established gold regions. Neighbors include Barrick Gold, Osisko Mining and several smaller companies. Goldseek aims to develop properties, prove up deposits and then achieve exits as quickly as possible. To do this, the management team is taking a lean approach that will reduce costs and ensure that the Company's capital is put to the best possible use in exploration. To ensure that these are not just empty words, Goldseek publishes the calculation: in 2020 and 2021, 81% of the funds are to flow directly into exploration, with the remainder going to fees, costs for accounting or legal advice, and other services.
So far, Goldseek Resources is relatively unknown among private investors - in February, the share of private investors counted only 11%. Management, on the other hand, held 61% and professional investors 28%. Yet, the Company's strategy could prove attractive, especially in times when the gold price is trending sideways. Since Goldseek Resources' projects are in the early stages, short-term fluctuations in commodity prices are not relevant. Instead, what matters is concrete success on the ground. Here, Goldseek has several irons in the fire with many small projects. That ensures a constant news flow and could lead to exits in the next few months. Even if the gold price currently shows little movement, the industry is still confident - the development of many other prices already points to an inflationary environment. If this scenario occurs, the gold market should also pick up again. Small companies in the gold sector, in particular, could be suitable for cautiously getting a foot in the door at present.