The unprecedented invasion of Ukraine and the rising inflationary pressures increased gold demand in the first quarter to the highest level since the fourth quarter of 2018. U.S. dollar gold prices climbed 8% in the last quarter, while demand for the yellow metal rose 34% year-over-year. The iShares Gold Trust (IAU) has gained 1.9% over the past six months versus the S&P 500’s 19.4% decline.
The U.S. inflation rose to 8.6% in May, posting a new 40-year high, which raised gold prices. As the World Bank raised the concerns that a recession might be hard to avoid for some countries, gold demand might start to attract more safe-haven asset demand. Moreover, U.K.-based precious metals research firm Metal Focus predicted that gold’s safe-haven demand could cause its prices to average at $1,830 an ounce this year, which would be a record high average price.
Given this setting, the gold mining stocks Centerra Gold Inc. (CGAU), B2Gold Corp. (BTG), and Jaguar Mining Inc. (JAGGF) might stand to benefit from the market tailwinds.
Centerra Gold Inc. (CGAU)
CGAU operates as a gold mining company that acquires, explores, and develops gold and copper properties in North America and globally. The company’s principal project includes the 100% owned Mount Milligan gold-copper mine, located in British Columbia. It is headquartered in Toronto, Canada.
On May 4, CGAU announced a quarterly dividend of CAD0.07 per common share, which was payable to shareholders on June 1. This reflects the company’s ability to pay back its shareholders.
On April 20, Kootenay Resources Inc. announced the signing of an option agreement with a CGAU subsidiary whereby the company was granted an option to earn 70% interest in the Copley property located in the Nechako Plateau of Central British Columbia. This might expand the operative capacity of the company.
For the fiscal first quarter ended March 31, CGAU’s revenue increased 30.5% year-over-year to $295.22 million. Adjusted net earnings from continuing operations and adjusted net earnings from continuing operations per common share came in at $56.40 million and $0.19, up 100% and 90% from the prior-year quarter.
The consensus EPS estimate of $0.98 for the fiscal year 2022 indicates a 27.3% year-over-year increase. Likewise, the consensus revenue estimate for the same year of $1.18 billion reflects a rise of 30.7% from the prior year.
The stock has gained 3.1% over the past six months to close yesterday’s trading session at $7.06.
CGAU’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CGAU has a Quality grade of A and a Growth and Value grade of B. In the 51-stock Miners – Gold industry, it is ranked #1.
Click here to see the additional POWR Ratings for CGAU (Momentum, Stability, and Sentiment).
B2Gold Corp. (BTG)
BTG, based in Vancouver, Canada, is a gold producer primarily operating in three mines in Mali, the Philippines, and Namibia. The company also holds interests in Calibre Mining Corp. and BeMetals Corp.
On June 8, BTG declared a second-quarter dividend of $0.04 per common share, payable to shareholders on June 29. This reflects upon the company’s cash generation and shareholder return ability.
On May 26, BTG announced that it had entered into a definitive Scheme Implementation Agreement with Oklo Resources Limited to acquire 100% of the fully paid ordinary shares of Oklo. The acquisition is expected to provide BTG with landholding in greenstone belts in Mali, West Africa, which include Oklo’s flagship Dandoko Project.
BTG’s gold revenue increased 0.9% year-over-year to $365.58 million in the fiscal first quarter ended March 31. Cash and cash equivalents balance rose 26.6% from the prior-year period to $648.76 million. Net income for the period and EPS stood at $90.80 million and $0.08, respectively.
Street EPS estimate for the quarter ending June 2022 of $0.06 indicates a 20% year-over-year improvement. Likewise, Street revenue estimate of $376.79 million for the same quarter reflects a rise of 3.8% from the prior-year quarter.
BTG’s stock has gained 4.5% over the past six months to close yesterday’s trading session at $3.75.
It’s no surprise that BTG has an overall B rating, which translates to Buy in our POWR Rating.
BTG has a B grade for Sentiment and Quality. It is ranked #5 in the Miners – Gold industry.
To see the additional POWR Ratings for Growth, Value, Momentum, and Stability for BTG, click here.
Jaguar Mining Inc. (JAGGF)
JAGGF is a junior gold mining company that acquires, explores, develops, and operates gold-producing properties in Brazil. The company, headquartered in Toronto, Canada, holds principal assets in the Iron Quadrangle in Minas Gerais, Brazil.
On June 10, JAGGF announced a notice for a normal course issuer bid to purchase for cancellation up to 3,623,640 common shares in the capital of the company. The company intends to enhance long-term shareholder value by purchasing and canceling common shares at a discount to their underlying value.
For the fiscal first quarter ended March 31, JAGGF’s free cash flow increased 1,245.2% year-over-year to $2.65 million. Cash generated from operating activities came in at $7.71 million, up 19.2% from the same period the prior year. Revenue stood at $30.62 million.
The consensus EPS estimate of $0.27 for the fiscal year 2023 indicates a 430% year-over-year increase. Likewise, the consensus revenue estimate for the same year of $157.63 million reflects a rise of 6.7% from the prior year.
JAGGF’s shares have gained 4.8% over the past month to close yesterday’s trading at $2.41.
This promising prospect is reflected in JAGGF’s POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
JAGGF has a Quality grade of A and a Value and Momentum grade of B. It is ranked #3 in the Miners – Gold industry.
In addition to the POWR Rating grades we’ve stated above, one can see JAGGF ratings for Growth, Stability, and Sentiment here.
CGAU shares were trading at $7.23 per share on Wednesday morning, up $0.17 (+2.41%). Year-to-date, CGAU has declined -4.71%, versus a -20.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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