November 8th, 2021 | 13:05 CET
Triumph Gold, Barrick Gold, Rheinmetall - Precious metal stocks jump!
Table of contents:
Triumph Gold - Opportunity at a reduced level
The signs for a further rising and also lasting high inflation are clearly to be seen. The inflation rate continued to rise last October. Nevertheless, ECB President Christine Lagarde also considers interest rate hikes unlikely, with only the end of the trillion-dollar PEPP Corona emergency program in March 2022 being promised.
In conjunction with the high government debt levels, investors should protect their assets by investing in equities, real estate and precious metals. Gold, meanwhile, has the advantage that, unlike the stock markets, it is not yet overvalued. Due to the correction taking place on the gold market for months, shares of gold producers and exploration companies are at an attractive valuation level.
High potential is held by Triumph Gold, which is focused on the continued development of its flagship Freegold Mountain project in Yukon's prolific Dawson Range copper-gold belt. The project hosts three significant mineral deposits: the Nucleus deposit, which contains silver-gold and copper deposits; Revenue, which includes gold, silver, copper, molybdenum and tungsten; the Tinta Hill polymetallic vein deposit; and numerous other gold and copper deposits.
Back in September, Triumph Gold completed a 19-hole drill program totaling 6,615m. Results should be released during November. An important personnel matter was resolved with the appointment of former chief geologist Brian May as Triumph Gold's new president. May has been instrumental in developing the Freegold Mountain project and has demonstrated his expertise in the past at several gold projects in the Yukon, British Columbia, California, Arizona and Nevada. Triumph Gold has corrected sharply from last year's high and is attractively valued at current levels with a market cap of around CAD 20 million.
Barrick Gold - Above forecasts
The share certificates of the world's second-largest gold producer, Barrick Gold, have also undergone a stronger correction. The business activities of the Canadians include the production and sale of gold and copper, as well as exploration activities and mine developments. About 90% of its sales are in the precious metal, with the remainder in the industrial metal, copper. Barrick holds interests in 14 gold mines.
Unlike industry leader Newmont Mining, which spooked investors with its third-quarter numbers showing lower production and higher costs, the Toronto-based company's numbers slightly beat estimates. The released third-quarter results showed attributable gold production of 1.09 million ounces for the quarter and 3.23 million ounces for the year to date. Attributable copper production was 100 million pounds for the quarter and 289 million pounds for the year to date. Q3 adjusted net earnings per share were USD 0.24, above the analyst consensus of USD 0.23.
Full-year results are also expected to hit the high end of forecasts. On the one hand, strong Q3 production in Africa and Middle East (AME) and Latin America regions came as a surprise. On the other hand, the plant at Carlin (Nevada, USA) was repaired and is running at full capacity again.
Rheinmetall AG - Full order books
Rheinmetall, the defence group and automotive supplier, also delivered a positive surprise when it presented its final figures for the third quarter. However, the Düsseldorf-based company was hit by the ongoing semiconductor crisis and the shortage of various raw materials, resulting in revised sales expectations weeks ago. For the current fiscal year, the management is forecasting revenue growth of 6%, compared to 7 to 9% previously. Nevertheless, the margin could be increased in Q3 due to cost savings. In the medium term, Rheinmetall aims to realize around 10% of sales as operating profit.
Meanwhile, another significant order was announced, further filling the order book. A global systems partner placed an order to supply an electric air-conditioning compressor worth a total of EUR 80 million. "We were able to expand our very high order backlog to now more than EUR 14 billion with important contract wins, thus reaching a completely new level for Rheinmetall," said CEO Armin Papperger when presenting the final figures. The analysts at Kepler Chevreux continue to take a positive view of the Düsseldorf-based company's development and reiterate their buy rating with a target price of EUR 115. A significant increase in profitability is expected for the year as a whole.
Inflation remains at a high level and, in contrast to the opinions of the central banks, it is likely to be not only temporary but to remain longer than expected. Gold has always proven to be a reliable protection against currency devaluation. The gold producer Barrick Gold and exploration Company Triumph Gold are attractive at a reduced level. Rheinmetall should continue to increase its profitability.
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