LONDON, Aug. 22, 2019 /PRNewswire/ -- Another trade war could be around the corner. The perfect time for investors to hedge. And, like magic, gold prices are up: the gold index hit a six-year high on August 1.
Gold miners are having a stellar year. And even if things don't turn south for the market, adding gold to your portfolio is a great way to diversify assets and hedge against potential downturns. Mentioned in today's commentary includes: Barrick Gold Corporation (NYSE:GOLD), Newmont Goldcorp (NYSE:NEM), Franco-Nevada (NYSE:FNV), Kirkland Lake Gold (NYSE:KL), Pan American (NYSE:PAAS).
Here are six trends gold investors should consider:
Go Big Or Go Home
The Big Kahuna—Barrick Gold Corporation (NYSE:GOLD) is the world's most profitable gold company, with five of the ten largest gold mines in the world.
In terms of sheer size, the mega-merger of Newmont and Goldcorp has Barrick beat. But don't count this company out. Barrick has risen 25% since June, on the back of rising gold prices and strong demand. That jump means Barrick has grown 54% over the last year, blowing its competitors out of the water.
Gold-watchers pegged Barrick as the company to beat last June—thanks to a strong balance of revenue to debt and production which has steadily increased, thanks in part to the acquisition of Randgold and a joint venture with Newmont in Nevada. And earnings estimates for Barrick continue to climb.
Given its strong position and sterling credentials, Barrick makes for an excellent hedge against downturns elsewhere in the market.
Off The Beaten Path
The world's newest gold rush is taking place where you'd least expect it. Everything started when artisanal miners found a couple of large gold nuggets. One nugget weighing 1kg and worth $45,400, and another nearly three times the size—worth $122,500. And these nuggets are just the beginning.
The mine where they were found has huge potential, with visible gold extending from the surface all the way down to 200 meters. It is sitting on one of the largest gold belts in the world, making it no surprise that African Gold Group's (AGG.V; AGGFF) Kobada mine in southern Mali is drawing so much attention.
The Kobada Mine is located in a region of West Africa that has just become the world's largest gold producing area—overtaking gold giant South Africa for the first time.
AGG initially shot for a 50,000 oz/year haul from Kobada, but now it's aiming for twice that—100,000 oz/year from a total deposit expected to exceed more than 2.2 million ounces. And to top it all off, Kobada has so far only focused drilling on less than 10% of its perspective concessions.
At current prices, that's $3.1 billion in gross revenue—all for a company with a tiny $12 million market cap.
Gold investors are already shifting their attention to West Africa—the region is stable, labor costs are low, and licensing takes only a few months (unlike North America, where acquiring licenses and permits can take 5-7 years).
The interest is turning the area around Kobada into a mining hotspot. According to Mining Intelligence, 61 new assets are in production or construction stages, with 24 assets undergoing economic assessments…and a colossal 367 assets in exploration.
All of this is good news for AGG, which has been able to raise fresh funds for its Kobada operation.
The team at AGG (AGG.V; AGGFF) is a rogue's gallery of mining industry professionals and financial whizzes who have spun iron ore into gold for decades…and are ready to do it again at Kobada. Two directors, Sir Sam Jonah and Bruce Humphrey, have a hundred years of combined experience working the finances for mining operations.
Working the heavy machinery is mining engineer Danny Callow. Callow served as the mining head for Glencore's Africa Copper division, where he built and operated a number of copper and cobalt operations in Africa to more than 400,000t per year including building the world's largest cobalt mine. But the real news here is Stan Bharti, the company's new CEO. With thirty years of experience and a jaw-dropping resume, Bharti at the helm means AGG's future looks extra bright.
Under Bharti's direction, several mining companies uncovered 20 million oz of gold, more than 3 billion tonnes of ore, amassing $3 billion in investment capital.
Plus, Bharti's got an eye for changes in the gold market. He correctly predicted prices would spike in the mid-1990s, and again after 2003. He took a small company in 2008, at the height of the global financial crisis, and spun it off into a deal worth $500 million.
With Bharti in charge and the Kobada mine close to entering operation, AGG is a stock to watch.
Two of the world's largest gold companies merged earlier this year, creating Newmont Goldcorp (NYSE:NEM), a gold giant and one of the strongest gold stocks around. The acquisition has caused the stock's growth to lag—Newmont has seen only a minor bump of about 2.2%, next to Barrick's fantastic 53% growth since September 2018.
Plus, it could take some time for those assets to start paying off—Newmont's management thinks it could take up to three years for some of Goldcorp's mines to reach optimal levels of production. But that doesn't detract from its strong earnings position. Revenue in Q2 of 2019 reached $2.26 billion, up from $1.66 billion the previous year.
Production also went up—Newmont dug up 1.5 million oz of gold in Q2, the highest quarterly haul in years.
Still, it'll take some time for this new mega-firm to digest its new acquisitions. Part of that transition will be a leadership swap—after seven years, CEO Gary Goldberg is stepping down to make way for Tom Palmer, COO since 2016.
Higher gold shipments from Goldcorp assets means Newmont's revenue should increase by about 45% in 2019 from last year's level. The gold assets should also insulate Newmont from volatility in the copper market, which has taken a bite out of its earnings in the last few years.
Plus, Newmont's joint venture with arch-rival Barrick seems to be working for both companies—assets in Nevada should pay big dividends
The Streaming Play
Franco-Nevada (NYSE:FNV) isn't a miner per se—the company makes its living off of gold royalties and streaming, and holds interests in platinum group metals and other assets. In other words: rather than mine, FNV finances the mines of other companies, in return for an easy share of the profits.
Strong demand for gold and an excellent portfolio has sent FNV shooting off like a rocket—the company's price has gone up by 27.9% in the last three months, thanks to earnings growth of 21% for the year. And that's part of a historical trend—since its IPO ten years ago, FNV has performed beautifully, offering 400% returns to investors without counting dividends
The company has steadily added assets—taking on a 2% royalty on Marathon Gold Corp's Valentine Lake operation in central Newfoundland for $18 million, as well as a 2% royalty on the Gold Field's operation at Salares Norte in Northern Chile for $32 million.
These are small potatoes for a company worth $18 billion, but it's a sign that FNV's excellent growth shows no signs of slowing. ut an even bigger deal is on the horizon—in July, FNV announced it was entering into an agreement with Range Resources Corporation for an overriding royalty interest in the Marcellus Shale formation, a deal worth $300 million. This deal means FNV could be slowly moving away from gold and platinum and into natural gas and oil.
Unlike other major miners, which have assets scattered around the world, Kirkland Lake Gold (NYSE:KL) is focused on Canada and Australia. Its portfolio makes it a low-risk, high-value stock, one that looks even more attractive after the good news from 2018.
Kirkland currently boasts a Zacks "Strong Buy" ranking. The Zacks Consensus Estimate for earnings in 2019 has risen 52%, and project four-year growth of 47%. And Kirkland doesn't intend to slow down any time soon.
It has plans to expand operations in Canada and is sinking more than $100 million into exploration, confident that "peak gold" predictions won't come to pass. The company's Canadian workforce is set to grow by the thousands, once a new shaft is sunk at the Macassa mine. Look to Kirkland for more exciting news in 2019.
Diversification Is Key
Pan American (NYSE:PAAS) is a world-class mining operation with active projects in Mexico, Peru, Canada, Bolivia and Argentina. Though silver has seen better days, it is still a favorite among investors stocking up on safe haven assets.
Recently, Pan American made a major acquisition of Tahoe Resources, absorbing the company's issued and outstanding shares.
Michael Steinmann, President and Chief Executive Officer of Pan American Silver, said: "The completion of the Arrangement establishes the world's premier silver mining company with an industry-leading portfolio of assets, a robust growth profile and attractive operating margins. We are also now the largest publicly traded silver mining company by free float, offering silver mining investors enhanced scale and liquidity."
By. Meredith Taylor
IMPORTANT NOTICE AND DISCLAIMER
PAID ADVERTISEMENT. This communication is a paid advertisement. Oilprice.com, Advanced Media Solutions Ltd, and their owners, managers, employees, and assigns (collectively "the Publisher") is often paid by one or more of the profiled companies or a third party to disseminate these types of communications. In this case, the Publisher has been compensated by2227929 Ontario Inc. to conduct investor awareness advertising and marketing concerning African Gold Group. Inc.2227929 Ontario Inc. paid the Publisher fifty thousand US dollars to produce and disseminate this and other similar articles and certain banner ads. This compensation should be viewed as a major conflict with our ability to be unbiased.
Readers should beware that third parties, profiled companies, and/or their affiliates may liquidate shares of the profiled companies at any time, including at or near the time you receive this communication, which has the potential to hurt share prices. Frequently companies profiled in our articles experience a large increase in volume and share price during the course of investor awareness marketing, which often ends as soon as the investor awareness marketing ceases. The investor awareness marketing may be as brief as one day, after which a large decrease in volume and share price may likely occur.
This communication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. Neither this communication nor the Publisher purport to provide a complete analysis of any company or its financial position. The Publisher is not, and does not purport to be, a broker-dealer or registered investment adviser. This communication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company's SEC, SEDAR and/or other government filings. Investing in securities, particularly microcap securities, is speculative and carries a high degree of risk. Past performance does not guarantee future results. This communication is based on information generally available to the public, and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the Publisher cannot guarantee the accuracy or completeness of the information.
SHARE OWNERSHIP. The owner of Oilprice.com owns shares and/or stock options of the featured companies and therefore has an additional incentive to see the featured companies' stock perform well. The owner of Oilprice.com has no present intention to sell any of the issuer's securities in the near future but does not undertake any obligation to notify the market when it decides to buy or sell shares of the issuer in the market. The owner of Oilprice.com will be buying and selling shares of the featured company for its own profit. This is why we stress that you conduct extensive due diligence as well as seek the advice of your financial advisor or a registered broker-dealer before investing in any securities.
FORWARD LOOKING STATEMENTS. This publication contains forward-looking statements, including statements regarding expected continual growth of the featured companies and/or industry. The Publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the companies' actual results of operations. Factors that could cause actual results to differ include, but are not limited to, changing governmental laws and policies, the success of the company's gold exploration and extraction activities, the size and growth of the market for the companies' products and services, the companies' ability to fund its capital requirements in the near term and long term, pricing pressures, etc.
INDEMNIFICATION/RELEASE OF LIABILITY. By reading this communication, you acknowledge that you have read and understand this disclaimer, and further that to the greatest extent permitted under law, you release the Publisher, its affiliates, assigns and successors from any and all liability, damages, and injury from this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.
INTELLECTUAL PROPERTY. Oilprice.com is the Publisher's trademark. All other trademarks used in this communication are the property of their respective trademark holders. The Publisher is not affiliated, connected, or associated with, and is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the Publisher to any rights in any third-party trademarks.
DISCLAIMER: OilPrice.com is Source of all content listed above. FN Media Group, LLC (FNM), is a third party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated in any manner with OilPrice.com or any company mentioned herein. The commentary, views and opinions expressed in this release by OilPrice.com are solely those of OilPrice.com and are not shared by and do not reflect in any manner the views or opinions of FNM. FNM is not liable for any investment decisions by its readers or subscribers. FNM and its affiliated companies are a news dissemination and financial marketing solutions provider and are NOT a registered broker/dealer/analyst/adviser, holds no investment licenses and may NOT sell, offer to sell or offer to buy any security. FNM was not compensated by any public company mentioned herein to disseminate this press release.
FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may", "future", "plan" or "planned", "will" or "should", "expected," "anticipates", "draft", "eventually" or "projected". You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company's annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and FNM undertakes no obligation to update such statements.
Media Contact e-mail: email@example.com
U.S. Phone: +1(954)345-0611