October 26th, 2020 | 11:10 CET
Yamana, Glencore, Scottie Resources - Accurate analysis required!
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"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Yamana Gold - A whopping 200,000 ounces per quarter
Yamana Gold Inc. is a Canadian-based mid-tier producer of gold and silver, with properties located in North America, Brazil, Chile, and Argentina. Yamana has reported strong Q3 results, with gold and silver production of 201,772 ounces and 3.04 million ounces, respectively. Total gold equivalent production was 240,466 ounces.
The Jacobina, El Penon, Minera Florida, and Canadian Malartic mines all enjoyed outstanding quarters. As total production from all mines is currently well ahead of plan, the Company has increased its production forecast for 2020 to 915,000 ounces from the previous 890,000 ounces, an adjustment of approximately 3%.
Yamana continued to generate substantial cash flow in the last quarter, bringing the cash position to USD 470 million by the end of the quarter. The annual dividend will increase by a further 50% to 10.5 cents per share from the fourth quarter of 2020. This yield will be 425% higher than 18 months ago. Good news for Yamana shareholders, we believe.
Glencore - permanently bad headlines
Completely different news, however, from the Swiss, raw materials giant Glencore. No other Company provides the supporters of the Corporate Responsibility Initiative (CSR) with as many arguments as the raw materials multinational, with global headquarters in Baar (Canton Zug). Glencore is one of the leading commodity traders and promoters and is heavily exposed in third world countries with dubious governments and legal systems. But Glencore was in the crossfire of criticism long before its global dominance.
The Company emerged from a trading company founded in 1974 by the legendary commodity trader and tax fugitive Marc Rich. The speculator, known as the "King of Oil," was trading in commodities in the 1980s, during a global embargo imposed against the apartheid regime in South Africa. With the stricter regulation and the transparency requirements that the IPO on the LSE in London in 2011 brought with it, Glencore's machinations came to light more and more. The list of transgressions that non-governmental organizations (NGOs) denounce, after sometimes lengthy research, has grown longer and longer ever since.
With the permanently negative headlines, Glencore has now become a reputational risk for Switzerland. At around EUR 1.83, the share price is approximately 60% below its stock market debut in 2011. The dividend was recently reduced from 6.5% to 2.2% per annum but is to be raised again soon. Although the share price trend calls for action, the share is probably only for hardened investors who like to ignore the topic of sustainability.
Scottie Resources - Gold from the Golden Triangle
Scottie Resources' projects are in prime locations in the so-called "Golden Triangle" - near the heavyweights, Pretium Resources and Ascot Resources. The Golden Triangle is one of the most productive mineralized areas in the world. It is home to past and present mining operations including Johnny Mountain, Red Mountain, Snip Mine, Premier Mine, Golden Bear, and Valley of the Kings. The mineral resources hosted there (past production and current resources) add up to a total of 67 million ounces of gold, 569 million ounces of silver, and 27 billion pounds of copper.
Scottie Resources Corp. holds a 100% interest in the past-producing Scottie Gold Mine, located in the heart of the Golden Triangle below a beautiful glacial area near Summit Lake, British Columbia. It was in operation from 1981 to 1985 and produced a manageable 96,000 ounces of gold. Due to the low gold price of USD 300-400 at that time, the mine was closed down after five years.
With today's prices around 1,900 USD, the revival has become interesting again, and Scottie has secured a land package of 24,589 hectares. Initial sensational results from the 2020 drill program show mineralization of up to 109.4 g/t gold in the former Scottie Mine. These are rocks that were discovered at the Klondike in 1896 and were the reason why 100,000 people came to explore at that time. The Scottie stock is 37% owned by management and institutional investors, and there are 144.2 million fully diluted shares with a market value of CAD 47.5 million. The Company is debt-free and had CAD 4.7 million in the cash box at the end of September. We are excited to see what the ongoing drilling will bring to light! Speculatively highly interesting.
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