August 10th, 2021 | 14:29 CEST
Troilus Gold, Barrick Gold, Vonovia - Where does the correction offer the greatest opportunities?
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"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.
TROILUS GOLD CORP - The tension is rising
Things are getting exciting at Troilus Gold. The Toronto-based Company plans to bring the formerly producing Troilus gold and copper mine in Quebec back into production. Recently, through a fund, the Quebec government invested about CAD 11 million at CAD 1.10 per share in a capital increase. The Company intends to use the cash inflow to continue engineering work and prepare a feasibility study for the Troilus Gold Project.
The Troilus mine produced more than 2 million ounces of gold and nearly 70,000 tons of copper from 1996 to 2010. However, with the onset of price declines, production ceased at that time. A project appraisal (PEA) last year confirmed the project's very high economic viability. According to the report, the project value is USD 1.156 billion at a gold price of USD 1,950, allowing a very rapid payback of the required investment sum of USD 333 million. The mine is projected to have an operational life of 22 years and average annual production of 246,000 ounces of gold for the first 14 years.
The acquisition of UrbanGold in May allowed Troilus to expand its land area by 35,000 ha to 142,000 ha (1,420 sq km) northeast of the Val-d'Or district in Quebec. UrbanGold shareholders now hold a 12.9% interest in Troilus. The deal was highly beneficial to both parties, significantly increasing the land package and thus uniting several target zones that are geographically in close proximity.
The Troilus Gold Project has the potential to create a new gold producer in Canada. Government funding has recently rewarded this promising project. A key milestone in the future will be the preparation of a feasibility study. The economic feasibility analysis from 2020 suggests a high level of profitability. Since then, the project has expanded significantly through the acquisition of UrbanGold. In addition, further drilling has taken place. All in all, these are developments that make the share appear extremely promising. Given the potential, a current market capitalization of CAD 176 million is moderate.
BARRICK GOLD CORPORATION - No big surprises
A few weeks ago, the world's second-largest gold producer published production data for the second quarter. Based on the information about the sales volumes and prices for gold and copper and the costs incurred, analysts arrived at an earnings forecast of USD 0.26 per share. Depending on which earnings number you look at, the Group has now exceeded or fallen short of expectations with the earnings figures delivered.
EPS of USD 0.23 and earnings per share adjusted for special effects of USD 0.29 were reported. Although the guidance for the current fiscal year was confirmed, we rather expect weaker share prices in the short term due to the declining gold price. We assume that there will be no significant reclassifications by analysts after the figures. Currently, the experts confirm an average upside potential of 37% for the shares.
VONOVIA SE - Last announcement
Interesting developments are currently taking place at the DAX-listed Company. After the planned takeover of its competitor Deutsche Wohnen recently failed for the second time, Vonovia is now making a third and final attempt to swallow the number 2 in the sector. Last month, Vonovia's takeover bid narrowly failed to meet the minimum acceptance threshold of 50%. The new offer, which is expected to be submitted before the end of August, provides a purchase price of EUR 53 per Deutsche Wohnen share, increased by EUR 1. Meanwhile, Vonovia published good figures on its business performance in the first half of the year, which the Group used to raise its profit forecast for the year slightly. In the first half of the year, operating profit (FFO) increased by 13% to EUR 765 million. The market value of the real estate portfolio increased by more than 7% to a good EUR 63 billion.
Companies with a high level of substance, in particular, offer good entry opportunities in the event of setbacks. Vonovia is certainly a special situation in connection with the takeover battle of its competitor Deutsche Wohnen. Long-term investors who believe in higher precious metal prices in the medium term can add a blue-chip such as Barrick Gold to their portfolio at a low price in the event of price weakness or buy Troilus Gold, which offers excellent opportunities.
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