The sell of Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) from our last bulletin would have filled at or above our limit of $6.11. We have a loss of nearly 48% on this position, bringing the average return on all closed positions to 92%. We have been trimming our list to make room for recent and future new buys.
In today’s bulletin, we look at several companies that have just released their first-quarter production numbers, which were mixed with a positive bias, and given good full-year outlooks.
Companies Had Mixed 1Q Results With Positive Outlooks
Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) reported first-quarter production, with both gold and copper output coming in below expectations. Gold production was 990,000, down from 1.2 million in the fourth quarter. The major factor for the quarter-on-quarter decline was the depletion of higher-grade stockpiles at Carlin mines.
Costs per-ounce are expected to be commensurately higher. The company reiterated that it expected the first quarter to be the lowest production quarter of the year, with steady increases throughout the year, as it maintained its annual guidance. Barrick also held an in-depth analyst presentation last week on its Reko Diq project in Pakistan. We have already discussed this project.
One point that CEO Mark Bristow emphasized is that a company does not get to choose in which country is its next tier-one asset. Having both the central and state governments as partners reduces the risk, he said, while a commitment to providing education and infrastructure in the local region would also help.
After a run-up, and with some war premium still in gold price, we rate Barrick a hold.
Record Profits at Osisko With More to Come
Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) released preliminary first-quarter results, showing a record quarterly profit. However, even with that, cold weather slowed the ramp-up of a couple of new projects.
Looking ahead, as these projects move to full production and the revenue from the Renaud diamond mine is included (starting next month), profits will continue to grow.
As with Barrick, we rate Osisko a hold.
Gold up, but less than expected, for Fortuna; year looks solid Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) first quarter production figures, just released, were generally positive, though mixed.
Gold output saw a 93% increase over the first quarter a year ago, though this was lower than expected; slower operations resulting from a COVID outbreak at the Lindero mine in Argentina was largely responsible for the shortfall.
Contrarywise, silver production saw a 13% decrease of the same quarter a year ago, but this was better than expected. The company re-iterated full-year guidance, saying all mines were on track to achieve their guidance. As with Barrick and Osisko, Fortuna’s stock has rallied recently, though still lags and remains good value.
Royal Takes a Breather After Record Year
Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) released annual guidance, lower than 2021 and below market expectations, due mostly to lower expected output at the Cortez mine (Royal holds a royalty over only part of the mine); and delays in ramping up Khoemacau due to a COVID outbreak. Royal expects full production there by year end.
First-quarter actual production was, however, slightly ahead of guidance; 2021 had seen three quarters achieve record volumes. The guidance is based mostly on public disclosures of operating companies of the mines on which Royal holds royalties or streams.
With the stock up 45% this year, we are holding.
BEST BUYS this week include Vista Gold Corp. (VGZ:NYSE.MKT; VGZ:TSX), and Lara Exploration Ltd. (LRA:TSX.V). Many of the juniors on our list that we have been recommending as buys recently — Orogen Royalties, Midland, in addition to Vista and Lara — are inching up and could have breakouts in the not-to-distant future, so don’t wait too long to buy if you do not already own.
University of California, Irvine law professor and former “United Nations Special Rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression”, one David Kaye, must have had a large business card.
Anyway, this “promoter of freedom of opinion” praises Twitter for moving away from free speech and “being a more realistic custodian of speech.”
FOLLOW THE LEADER
Leader of the House, that is. House Speaker Nancy Pelosi has the reputation as the best trader of any member of congress. Now, a publicly traded ETF aims to replicate her performance. The name of the fund? The Insider Portfolio!
HAWKISH? Jerome Powell and his band of merry men and women have been portrayed as hawkish as they set about tackling inflation. What piffle!
Even if we take the most aggressive plans from Fed spokesman at face value, the fed funds rate, with two 50 basis point hikes followed by 0.25 bpt as each meeting for the next year, rates will still be more deeply negative in real terms than they were at the onset of the great inflation of the 1970s; while the balance sheet — at the shocking pace of $95 billion per month — would still, one year from now be more than twice its size in August 2019 as it reversed course and starting increasing the size of its balance sheet. Some hawks!
QUESTIONS? I welcome your investment or economic questions, which I shall attempt to answer here. Please write to [email protected]
Originally published on April 18, 2022.
Adrian Day, London-born and a graduate of the London School of Economics, is editor of Adrian Day’s Global Analyst. His latest book is "Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks."
Want to be the first to know about interesting Gold investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: All. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Adrian Day's Disclosures
Adrian Day's Global Analyst is distributed by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. Publisher: Adrian Day. Owner: Investment Consultants International Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor's opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. ©2021. Adrian Day's Global Analyst. Information and advice herein are intended purely for the subscriber's own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.