16. September 2021 | 11:34 CET
Valneva, Barrick Gold, Central African Gold: Inflation fears and liberation strike
High inflation keeps investors on their toes. In August, the inflation rate in the US remained at a high level of 5.3% compared to the same month last year, as announced by the Labor Department of the world's largest economy. Therefore, the increase in consumer prices was only slightly below market expectations and the increase in July of 5.4%. Compared with the previous month, prices were 0.3% higher. Inflation data usually brings momentum to commodity stocks - positive as well as negative. This is as true for Barrick Gold as for Central African Gold, with one on a good path to higher prices. Valneva shareholders would like to see higher prices after the crash. However, analysts remain cautious.
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ISIN: VALNEVA SE EO -_15 | FR0004056851 , BARRICK GOLD CORP. | CA0679011084 , CENTRAL AFRICAN GOLD INC. | CA1523761098
"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
Central African Gold: Share with liberation blow?
There is good news at Central African Gold Inc. The shares of the broad-based explorer based in Canada have developed positively in recent days, rising to CAD 0.17. Thus, it is at the upper end of the sideways movement formed since mid-August. The reason for positive development is, in addition to the continuing shortage of raw materials, also an operational announcement. A few days ago, the Company reported the successful completion of a financing round. It was oversubscribed at a price of CAD 0.15. The placement price close to the market price is additionally positive. With the inflow of funds, the Canadians can continue to advance their development projects consistently.
Central African Gold is currently focusing on promising copper, cobalt and nickel projects in the Democratic Republic of Congo. These are not only to be developed but also subsequently operated. The Company benefits from an experienced local management team led by CEO Yves Kabongo. The Company owns a total of six mineral concessions with a total area of 176 sq km. Of interest to ESG investors: the areas also include forests and farmland. In the case of the King Luba properties, Central African owns 100% of the concessions. In addition, there is an option to participate in the state-controlled Musefu Gold Project. This project has historical grades of 2.5m at 28.4 g/t gold and 11m at 8.1 g/t gold. Thus, the Company is not dependent on the development of one commodity but is well diversified. If the sustainable jump above the CAD 0.17 mark succeeds, the chances for further share price gains are good. With the successful financing round, the liberation blow may have been achieved.
Barrick: No impetus, no buy
Investors have been waiting in vain for a liberation blow at Barrick Gold for quite some time. And even the continuing high inflation does not seem to be able to change anything. The gold price has been stuck in a rut for weeks. As a result, the urgently expected impetus for gold shares such as Barrick Gold is also missing.
The industry heavyweight is dominated by negative news. In August, billionaire Stan Druckenmiller announced to the media the sale of his Barrick shares. The investor is considered a gold bull. At around EUR 16.50, Barrick shares are not only still in a downtrend but are approaching their low for the year. If inflation above 5% does not provide any impetus, a purchase is not pressing at the moment.
Valneva: Analysts see no potential even after price slide
The Valneva share has not yet recovered from the shock at the start of the week. The British government's cancellation of the supply contract for the Company's Corona vaccine, which is currently in development, came as a nasty surprise to investors. It led to an interim drop in the share price of around 40%. The canceled supply contract for the classic inactivated vaccine was worth USD 1.4 billion. The exact reasons are still unclear. In the meantime, the first analysts have spoken out and critically viewed the current situation. Oddo BHF was already somewhat cautious about the Valneva share before the negative news but now has again lowered the price target from EUR 12.60 to EUR 11.80. The rating is "Neutral". Analyst Martial Descoutures expressed surprise that the UK government decided so close to the publication of Phase 3 data on the Covid-19 vaccine. Further orders are not expected before positive test results, he said. US investment bank Goldman Sachs also sees little upside potential for Valneva shares at present. Although the rating is "Buy", the price target of EUR 15.50 is significantly below the share level before the crash. At least the analyst remains fundamentally optimistic and sees other contract opportunities at possibly even better conditions. It will probably remain exciting with the share.
With the successful financing round behind it, Central African Gold's stock seems to be well on its way to achieving the liberation blow. Barrick Gold's stock is currently far from that. The coming weeks will be exciting for Valneva. A real liberation blow should only come with positive phase 3 data.