June 4th, 2021 | 09:27 CEST
Troilus Gold, First Majestic Silver, Sibanye Stillwater - This will move the prices!
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"[...] 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
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 - Impressive progress
Troilus Gold is an extremely exciting stock. The Toronto-based Company plans to put the formerly producing Troilus gold and copper mine in Quebec back into production. The 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 was halted at that time. Last year's positive PEA profitability study shows how profitable the business could be in the not-too-distant future. At a gold price of USD 1,950, from which we are currently not far away, the mineral deposit value is USD 1.156 billion. However, to enable production, investments of USD 333 million will have to be made, which will be quickly recouped given a planned long operating life of 22 years and a forecast average annual production of 246,000 ounces of gold in the first 14 years. A key figure that is often used to assess profitability is the IRR. Assuming the above parameters, this is 38.3%. Values around 40% bring a smile to investors' faces.
Troilus is continuously improving its strategic land position, which recently grew by 35,000 ha to 142,000 ha (1,420 sq km) northeast of the Val-d'Or district in Quebec through an acquisition. In mid-May, the Canadians were able to announce an expansion of the western J Zone. The gold mineralization extends over approximately 1.5 sq km, with the geological structure remaining open on all sides. The drilling program started in February continues. The areas below and around the former pits of the "old" mine contain estimated indicated and inferred resources of 4.96 million gold equivalent ounces at a gold grade of 0.87 g/t.
A few days ago, the Company announced the completion of the previously announced merger of Troilus Gold and UrbanGold. UrbanGold shareholders hold 12.9% of Troilus after the transaction. This deal is a win-win for both parties. The land package increases significantly, and several defined target zones are close together. The Troilus Gold Project has excellent potential, which will be documented by the ongoing exploration and progress. The next milestone is the pre-feasibility study in the current year. With a market capitalization of CAD 181 million, the Company is a clear buy.
FIRST MAJESTIC SILVER CORP - Silver producer acquires first gold mine
The founder and CEO of First Majestic Silver, Keith Neumeyer, is an old hand and knows what he is doing. And what if, after a long search of suitable acquisition targets, the corporate head of a silver producer concludes that there are none? Neumeyer's answer at the end of April was to buy the Jerritt Canyon Mine in Nevada. The gold project in the US state is 308 sq km in size and has produced around 9.7 million ounces of gold over the past 20 years. The seller of the mine is Sprott Mining. The entry into gold production is a novelty, but First Majestic is now also operating outside Mexico for the first time.
Regarding the outlook: even though the most recently presented Q1 figures were okay, the medium-term outlook is a burden. The Company currently has only three mining projects in Mexico, all of which have remaining theoretical lives of less than six years. That is a little too little for shareholders who want to strike it rich. The annual report presented at the end of March already revealed the weakness in the reserves and resources balance sheet. Silver reserves were down a whopping 26%, and gold reserves were down about 17%. Now that the Canadians have "topped up" elsewhere, analysts nevertheless remain skeptical and consider the stock to be maxed out at prices around CAD 22 and a market capitalization of CAD 5.6 billion.
SIBANYE STILLWATER - Share buyback announced
Sibanye-Stillwater is Africa's largest gold producer and among the world's leading platinum and palladium producers. Earlier this year, the South Africans announced their entry into the battery metals sector through a partnership with and investment in Keliber. The Finns are among the leading European lithium companies. Entering and perhaps rapidly expanding its footprint in battery metals or strategic metals is certainly a new and exciting chapter. Nevertheless, for the time being, everything revolves around precious metals. And here it quickly becomes clear: the stock is far too cheap. Given the 2022 earnings, it currently calculates a P/E ratio of 4.4. On June 1, the group announced its intention to acquire 5% of its shares. Currently, Sibanye is valued at a market capitalization of USD 14.9 billion. On average, analysts believe that the shares have a potential of 26%.
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