thyssenkrupp, Globex Mining, Barrick Gold - Which share holds the most potential?

thyssenkrupp - Another forecast cut

In the second quarter of the 2023/24 fiscal year, thyssenkrupp made significant progress in its strategic realignment, as announced by the Company on May 15. Despite a decline in revenue to EUR 9.1 billion and a lower adjusted EBIT of EUR 184 million due to the absence of one-off effects, free cash flow before M&A exceeded the previous year's figure due to seasonal effects. The 'APEX' performance program contributed to the implementation of efficiency improvements. CEO Miguel López emphasized that the measures are having an impact, particularly in the Steel division and Marine Systems. The annual forecasts for adjusted EBIT and free cash flow before M&A are expected to remain unchanged.

However, these plans have been a thing of the past since July 25. Given the preliminary results for the third quarter and the overall economic conditions, the Company has again lowered its forecast for the year. The Company now expects a 6-8% decline in revenue and an adjusted EBIT of over EUR 500 million. Free cash flow before M&A is estimated at around EUR -100 million compared to the previously expected positive development. The main reason for this is the continuing challenging market environment. Despite the efficiency improvement measures as part of the 'APEX' program, the Company was unable to fully offset the negative market influences.

The Essen-based company is endeavouring to position itself for the future. The Supervisory Board gave the green light for EP Corporate Group's 20% stake in the Steel business after the Executive Board reached an agreement in principle at the end of April. The deal is expected to be finalized before the end of the current financial year. This strategic partnership aims to ensure resilient and climate-friendly steel production and thus secure the future of the German steel industry, which is a challenge given the current high energy costs in Germany. Following the renewed forecast cut, the share price plummeted to a new 4-year low and is currently trading at EUR 3.527.

Globex Mining - Clearly undervalued

Globex Mining (Globex) pursues a business approach to create value for shareholders by acquiring mineral properties, improving them through exploration, options or joint ventures, developing them into production or, in certain cases, selling projects outright. Unlike most other junior exploration companies, Globex owns its properties, many of which are under option. This means that other interested companies can secure these properties and carry out the necessary exploration work to bring the projects into production. In return, Globex receives cash payments, shares, and licence fees upon production. In this way, the Company has been able to transfer the exploration risks to the optioning partners and grow strongly. The Company currently holds 249 property packages, over 99% of which are located in North America, representing secure jurisdictions.

Globex currently holds 105 projects, for which the Company receives royalties on production. The Company's broad commodity portfolio, which includes base metals, precious metals, speciality metals, and minerals, gives it a highly diversified position. On July 8, the Company acquired two promising gold projects: the former Eldrich Gold mine northwest of Rouyn-Noranda and the Porcupine West gold property west of Duparquet, Quebec. The acquisition was made in exchange for Rich Lake and Lac à l'Eau Jaune without any cash or shares involved. The Eldrich Gold mine is considered to have great potential that has so far remained untapped. Here, one can rely on the extensive expertise of CEO Jack Stoch, who has been leading the Company since 1983.

While other junior explorers with a single project have market values of several million CAD, applying just CAD 1 million per project to Globex would result in a market capitalization of CAD 249 million. In reality, the figure is only around CAD 52 million. This discrepancy is astonishing. The management of Globex Mining shares this view and has renewed its share buyback program. This allows the Company to buy back up to 1 million shares. There are currently only around 58 million fully diluted shares. The program will start on August 2. The Company currently has over CAD 20 million in cash and can easily manage the buyback. The share has recently consolidated from CAD 1.18 and is currently trading at CAD 0.92.

Barrick Gold - Strong Q2 figures expected

Barrick Gold Corporation published its preliminary production figures for Q2 on July 16, which impressed with 948,000 ounces of gold and 43,000 tonnes of copper. The sales figures were also pleasing, with 956,000 ounces of gold and 42,000 tonnes of copper sold. With an average gold price of USD 2,338 per ounce and a copper price of USD 4.42 per pound, these figures indicate a solid quarter. Overall, the Company expects a progressive increase in production towards the end of the year, with a focus on the second half of the year. The final figures are scheduled to be announced on August 12.

Compared to the first quarter, Barrick increased its gold production in the second quarter. This was primarily due to increased production at Turquoise Ridge following maintenance work and a successful ramp-up at Porgera, as well as significant increases at Tongon, North Mara, and Kibali. This progress was partially offset by planned production declines at Cortez and Phoenix. The copper figures also showed a positive trend, mainly due to higher grades and recoveries in Lumwana. Costs also fell due to increased production output and efficiency improvements, although higher stripping costs at Lumwana led to a slight increase in total costs.

Barrick also reported significant progress at the Loulo gold mine in Mali and the Port Moresby project in Papua New Guinea. CEO Mark Bristow emphasized the long-term importance of the Loulo mine complex for the Company and the Malian economy. At the same time, production targets at Port Moresby were exceeded despite challenges posed by landslides. The resumption of operations at the Porgera mine is showing positive results, and extensive measures have been taken to maintain production and support the local community. The share price has slipped again due to the sharp fall in copper prices and is currently trading at USD 17.79.

In conclusion, each of the shares analyzed offers potential. thyssenkrupp is struggling with a fresh forecast cut and is facing difficulties due to a challenging market environment, but is trying to become more stable in the long term through strategic partnerships and efficiency programs. Globex Mining is growing organically and appears significantly undervalued. For investors interested in commodities, the share is also interesting due to its broad diversification. Barrick Gold is showing promising signs with appealing preliminary production figures and significant progress in its projects, but is suffering from the recent fall in the price of copper.