April 13th, 2023 | 10:52 CEST
Vonovia, Barrick Gold, Blackrock Silver: Gold and silver shares in demand again
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"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
Barrick Gold: Analyst estimates too low?
The experts at researchanalyst.com have published an update on Barrick Gold and see good chances that the share will be one of the outperformers on the stock market in the coming months. After years of underperformance, mining stocks remain underrepresented in investors' portfolios. There is also room for improvement in analyst estimates. The average price target of the 17 analysts covering Barrick is CAD 29.70 (source: Refinitiv Eikon), which is not far above the current price of CAD 26.17. However, due to the high dynamics in the commodities sector, it is to be expected that Barrick will be able to achieve higher sales prices than some analysts expect. With corresponding upgrades, Barrick's share price should also get a boost.
Operationally and financially, Barrick Gold has done its homework in recent years. Due to a strong 4th quarter, the group has come close to achieving its production targets. The final gold production for 2023 was 4.14 million ounces, only 1% below the forecast. Copper production of 440 million pounds was in the expected range of 420 to 470 million pounds. Due to stable production costs and rising selling prices, Barrick earned about USD 500 per ounce shipped in 2023 - a record level. Mainly due to investments in the copper sector, the group's operating cash flow declined from USD 4.38 billion to USD 3.48 billion, but the annual dividend was raised from USD 0.37 to USD 0.65 per share.
Barrick is optimistic about the outlook and is betting on renewables. It is expected to produce 4.2 billion to 4.6 billion ounces of gold. For copper, the range is 420 million to 470 million pounds. Input costs are expected to remain unchanged in 2023. Management has also emphasized the transformation of energy demand towards renewable sources. This transition, it said, comes at a cost but is a prerequisite for meeting the increasing ESG criteria of investment companies. One example of Barrick's progress in renewable energy is the Loulo-Gounkoto mine. A solar plant was installed there, which reduces CO2 emissions by 62,000 tonnes per year.
Blackrock Silver: Share ripe for a recovery
researchanalyst.com also points out in their update on Barrick that investors should diversify their investments in the mining sector. Explorer stocks also belong in a precious metals portfolio. While the shares of large corporations are finally picking up, many explorers still have some catching up to do. The share of Blackrock Silver also belongs to this group. The Canadian explorer focuses on developing projects in the US state of Nevada. That already significantly reduces a frequently occurring country risk. In addition, the Company is not only focusing on silver projects, but also on lithium.
With the Tonopah West project, Blackrock Silver owns one of the highest-grade undeveloped silver projects in the world. There is even the potential for resource expansion. The newly consolidated land package comprises 100 patented and 279 unpatented mining claims covering an area of 25.5 sq km. The first adit-optimized mineral resource estimate is already in: 2.975 million tonnes grading 446 grams for a total of 42.65 million ounces of silver.
In addition, there is an exciting lithium project. In 2022, the exploration programme has not only led to a doubling of mineralization over the first resource boundary, but they have also discovered lithium. A lithium project in the US is arguably more valuable than anywhere else in the world. That is because the US government has declared independence along the electric mobility value chain and is massively promoting the entire sector. Although Blackrock Silver is still in the early stages of its lithium project, progress is already expected this year. In February, a 3,000-metre drilling programme was started. The approval process for another 4,000-metre drilling programme is underway. Implementation is planned for the current quarter. Blackrock Silver has secured financing in the past weeks. Due to the meanwhile completed capital measures, the share price came under pressure and currently offers an interesting entry opportunity at CAD 0.37. In January, the share was quoted at over CAD 0.60.
Vonovia: Time to buy?
The analysts at RBC believe that the time has come to enter Vonovia. For them, the share is a buy with a price target of EUR 33. Thus, the analysts believe a near doubling of the share price is possible. Investors are currently focusing too much on the financial situation of real estate companies against the backdrop of rising interest rates and are ignoring operational developments. The prospects for Vonovia's operating business remain good. The analysts do not rule out a capital increase, but in their view, this would not noticeably dilute the attractiveness of the Vonovia share. DZ Bank is also in the optimist camp when it comes to Vonovia. The analysts recommend buying the share and have a price target of EUR 27.50. They consider the panic reactions of investors in recent weeks to be exaggerated. From their point of view, there is currently no threat of a drastic devaluation of real estate stocks. Among the pessimists is Barclays. Their analysts see further price risks in the entire real estate sector. German residential real estate companies still have to adapt their business models and balance sheets to the changed environment of high-interest rates. Their target price for Vonovia is EUR 18. The share is currently trading just above this.
Gold and silver are shining again. The shares of the big producers have started to rise. Barrick is fundamentally sound, attractive from a chart perspective and a basic investment. Blackrock Silver has exciting projects in the silver and lithium sector, has secured financing for further drilling programmes, and the share has catch-up potential. The Vonovia share has recovered somewhat after the massive sell-off in recent days. However, rising interest rates, devaluation risks of the existing portfolio and a possible capital increase could cause panic again at any time.
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