Governments around the world have created more than $20 trillion in stimulus over the past seven months, and there’s only one place to turn for investors, advisors, and asset allocators: Gold.
So far this year, gold is the best performing major asset in the financial world due to rising uncertainty related to the global pandemic, geopolitical instability, civil unrest, and the potential for a constitutional crisis related to the political process in the US – the foundational player in the global currency system.
However, if we are looking ahead at a robust continuing gold bull market context, the big gains may be in the gold mining plays, rather than bullion. With that in mind, we take a look at some of the most interesting and active stocks in the space, including: Kinross Gold Corporation (NYSE: KGC), JNC Resources Inc (OTC: JNCCF) (CSE: JNC), and New Gold Inc (NYSEAMERICAN: NGD).
Kinross Gold Corporation (NYSE: KGC) trumpets itself as a company that engages in the acquisition, exploration, and development of gold properties principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana, and Mauritania.
It is also involved in the extraction and processing of gold-containing ores; reclamation of gold mining properties; and production and sale of silver. As of December 31, 2019, its proven and probable mineral reserves included approximately 24.3 million ounces of gold, as well as 55.7 million ounces of silver.
Kinross Gold Corporation (NYSE: KGC) recently announced that it has entered into agreements to acquire a 70% interest in the high-quality Peak Gold project in Alaska from Royal Gold, Inc. and Contango ORE, Inc. (OTCQB: CTGO) for total cash consideration of $93.7 million. Kinross will have broad authority to construct and operate the Peak Gold project, with Contango retaining a 30% non-operating minority interest.
According to the release, the Peak Gold project is a relatively high-grade deposit with a large estimated resource base that is expected to commence production in 2024 as a low-cost, open pit mine. The project, which is located approximately 400 kilometers (250 miles) southeast of the Company’s Fort Knox mine, is a low-risk “tuck-in” to supplement Kinross’ existing Alaska operation. Kinross plans to process Peak Gold ore at Fort Knox and utilize the existing mill and infrastructure to benefit both the project and the mine.
Even in light of this news, KGC hasn’t really done much of anything over the past week, with shares logging no net movement over that period. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -9%.
Kinross Gold Corporation (NYSE: KGC) managed to rope in revenues totaling $1.4B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 24.5%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.1B against $1B).
JNC Resources Inc (OTC: JNCCF) (CSE: JNC) is an interesting junior mining player in the space. While a more speculative name, it may also have the greatest potential for future appreciation given that it has a bearing on strong future production, but hasn’t yet reached the point where markets are discounting the value of that potential.
The company’s goal is to develop under-explored properties and benefit from deal flow generated by its strategic partnership and growth opportunities. JNC also acquired 100% control and interest in the Imperial Project in Nevada earlier this year. The Imperial Property is located in Esmeralda County, Nevada, which has been a prolific mining area in the state.
JNC Resources Inc (OTC: JNCCF) most recently announced its upcoming drill plans at its Imperial Project in Nevada. The Company has secured qualified contractors to commence as soon as a suitable drill rig is available, in addition, all Covid-19 protocols will be established and implemented.
According to the release, the Company has targeted three to four reverse circulation (RC) holes that will define gold-silver-rich veins and will further explore structures parallel to those already discovered. These holes will not exceed 600 feet in depth unless a hole ends in altered rock, in which case drilling will continue until in barren material. Minimal earthwork will be undertaken to construct roads, pads, and sumps for the holes.
Mike Mulberry, CEO of JNC Resources stated “We are excited to begin the drilling for the Imperial Project, given the current demand for gold exploration. We anticipate all holes will intersect the main imperial vein, with at least one hole testing the down-dropped portion of the vein in deeper, more favorable host rock than historic drilling. Given the strategic location of our Imperial Property and being within the peripheral of Goldfields, we are highly encouraged about the prospect of our project and the potential for some significant discoveries.”
JNC Resources Inc (OTC: JNCCF) is a junior miner that has yet to begin initial revenue growth. However, the company has promising assets, which was further highlighted by its sampling results this month in Nevada. As the gold space potentially heats up into year-end, JNC could be an interesting stock to have on the radar.
New Gold Inc (NYSEAMERICAN: NGD) frames itself as an intermediate gold mining company that engages in the development and operation of mineral properties. It explores for gold, silver, and copper deposits.
The company’s principal operating properties include 100% interests in the Rainy River gold-silver mine located in Ontario, Canada; and New Afton gold-copper mine located in British Columbia, Canada. It also holds 100% interests in the Blackwater gold-silver project located in British Columbia, Canada; and operates the Cerro San Pedro gold-silver mine in Mexico.
New Gold Inc (NYSEAMERICAN: NGD) most recently reported its Q3 results, including total production of 115,536 gold equivalent (gold eq.) ounces (78,959 ounces of gold, 171,825 ounces of silver, and 18.2 million pounds of copper), which puts it on track to achieve to meet revised production guidance estimates.
“We are very pleased with the results from the Rainy River Mine as the operations met, or exceeded, target levels. Supported by the strong operational performance delivered in the quarter and with all deferred site construction capital substantially complete, the operation is well positioned to deliver on its life of mine plan that includes strong production growth at lower costs along with a significant and corresponding reduction in capital requirements.” stated Renaud Adams, CEO. “Our improved operational performance has allowed New Gold to complete key corporate transactions during the year that supported the restructuring of our balance sheet and strengthened our liquidity position. As we enter the final quarter of the year, we will continue to build on the progress made during the year as we position the Company for the future and deliver free cash flow generation beginning in 2021.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week.
New Gold Inc (NYSEAMERICAN: NGD) pulled in sales of $174M in its last reported quarterly financials, representing top line growth of -16.1%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($953.7M against $224.7M).
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