Several resource companies on expert Adrian Day’s list have reported their production numbers for the third quarter, with some positive surprises, though costs are rising.
Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) reported production of just under one million ounces, down 54,000 ounces from the year-ago quarter and below estimates, while costs have risen. Copper production, however, was stronger than forecast. The company believes it will have a strong fourth quarter so that annual production will be within guidance, at the lower end for gold but mid-range for copper.
While production was down, costs rose. Cash costs for gold rose 3-5% last quarter to US$889/oz, partly reflecting the lower production during the quarter. All-in-sustaining costs, estimated at US$1,248, are also up 3-5% on the quarter, 20% from a year ago.
The production shortfall is largely attributable to the Nevada Gold Mines, where anticipated higher grades did not materialize, though are expected this quarter. Pueblo Viejo in the Dominican Republic partly offset the lower Nevada output.
With dynamic management and world-class assets around the globe, Barrick, trading at low valuation multiples, is a Buy.
Osisko Has Another Record, With Growth Ahead
Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) reported another record quarter with deliveries, revenues, and cash margin all at new highs. Production was up 7% quarter-on-quarter, and the company expects this trend to continue into the final quarter of the year, putting it on track to meet its annual guidance, albeit at the low end of the range.
One negative was that the Eagle mine, operated by Victoria Gold, still in ramp-up, had problems with a conveyer, with operations down for two to three weeks. The company bought back 1.3 million shares at a total cost of CA$16.5 million during the quarter.
With conservative management and a built-in pipeline of growth, Osisko is a Buy.
Royal on Track To Meet Guidance
Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) announced it has sold just 56,000 oz of gold equivalent ounces (GEOs) during the quarter, identical to the previous quarter, though below analyst estimates.
The company had 31,000 ounces in inventory at the quarter end, mostly gold but also silver and copper. The company in on track to achieve the upper end of its annual production guidance.
With quality assets, Royal Gold is a Buy.
Another Strong Quarter for Altius
Altius Minerals Corp. (ALS:TSX.V) reported strong quarterly revenue, though slightly down from Q2, which was a record for the company. For the year-to-date, revenue is up 30% on the comparable period in 2021. The outperformance was attributable to higher thermal coal revenue and strong if expected, revenues from potash.
Once again, the results demonstrate the benefits of a diversified portfolio, as some commodities perform better than others.
During the quarter, Altius purchased additional shares in Labrador Iron Ore Royalty, and it remains active on its buy-back program. Separately, the Supreme Court of Canada ruled in an unrelated case on what constitutes a taking by regulatory action.
This has positive implications for Altius’ ongoing case against Alberta for its action against coal mines on which the company holds royalties.
Although Altius is a core holding for us, given that the volatile stock is at the top of the recent range, we will hold and look for pullbacks to add.
Key Drilling Ahead for Lara
Lara Exploration Ltd. (LRA:TSX.V) has resumed drilling at its Planalto Project in Brazil after receipt of a new permit to extend drilling northwards from the new Cupuzeiro discovery at the project. Additional critical drilling to test the gap between Cupuzeira and the original Homestead deposit is planned once a separate permit is received for that.
Capstone Copper can earn up to 70% in the project on certain conditions.
At this price, Lara is a very strong Buy.
New Targets for Midland
Midland Exploration Inc. (MD:TSX.V) said it had discovered several new mineralized areas of high-grade copper and gold in its strategic alliance with SOQUEM in the Labrador Trough in Quebec. The company will evaluate the results and looks to advance exploration, possibly with drilling next year.
With strong management, a solid balance sheet, and multiple active projects, Midland is a Buy.
BEST BUYS this week include, in addition to the above, Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE); Gladstone Investment Corp. (GAIN: NASDAQ); Nestle SA (NESN:VX; NSRGY:OTC); Hutchison Port Holdings Trust (HPHT:Singapore)); Ares Capital Corp. (ARCC:NASDAQ); and Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ).
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Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. 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. © 2022. 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.
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