Oil Prices Dropping Has Gold Prices Jumping On Monday
Early this morning, gold prices traded above $1,700 for the first time since 2012. This monumental milestone accompanied the sell-off in oil as questions rose about production levels. Since Russia didn’t agree to tweak its output, oil prices suffered a huge blow on Monday. Thanks to this, along with the rising coronavirus uncertainty, the markets followed suit in taking a big hit. In fact, the drop was so drastic that it triggered a circuit breaker halt across major exchanges.
Needless to say, the price of gold has settled a bit and gold stocks have benefited. Ads of the lunch hour, gold futures traded around $1,665 while volume remained higher than average. Some had thought gold would take a hit in general, from the coronavirus. This may have been due, in part to the disruption that the overall global supply chain realized this year. But as we’ve seen, companies have begun to report their preparation plans.
On Friday, Barrick Gold (GOLD-Free Report) reported that it was well-prepared for the coronavirus. Barrick explained that it’s using its experience dealing with Ebola virus outbreaks around its African operations to manage its response to the coronavirus epidemic. The company said it had counseled all employees about the symptoms of the virus and the risk of contracting the infection. Furthermore, Freeport-McMoRan (FCX-Free Report) said Monday that it hasn’t experienced any significant disruptions to its supply chain or shipping operations.
Junior Gold Stocks To Watch
While larger companies have cited preparatory plans, eyes focus on junior gold stocks for more opportunities to take advantage of the latest surge in gold. One of the main reasons for this could have something to do with the exploratory nature of the business models for some of these companies.
IMC International Mining
Take IMC International Mining (IMIMF-Free Report) (IMCX) for example. The company is in the exploratory phase of development. With one plot already under ownership in Arizona, the company has focused its efforts on expanding a global exploration footprint. The company announced plans to acquire a property in northern British Columbia. This would be accomplished through the purchase on Thane Minerals, giving direct access to its 100% owned Cathedral Property.
After signing a letter of intent, most of the focus for the market has been on if or when the deal would close. Last week IMC announced that it would begin trading on the Frankfurt exchange. But something else was also revealed in that press release. “The Company anticipates the closing of the [Thane Minerals] transaction will occur on or before March 15, 2020.”
Given the timing of all of this, including the rising price of gold, shares of IMC have seen strong trading momentum during recent sessions. It’s also worth noting that when it comes to junior gold stocks, some of the biggest windfalls have come from companies moving from “exploration” to “discovery” phases of development. For IMC, the Cathedral property could give the company direct access to an area rich in mineralization specific to gold discovery.
Yamana Gold (AUY-Free Report) is another one of the lower-priced gold stocks that caught attention on Monday. The gold stock bounced off of its 50-day moving average. It managed to swing to a gain on the day by lunch. The price of Yamana gold stock traded lower than its previous close on Monday morning. But the momentum gold prices are seeing right now is too hard to ignore.
The company recently announced an update for exploration activities on its pipeline of gold projects, including the Domain Joint Venture in Manitoba. The JV is held 70.4% by Yamana and 29.6% by New Dominion, with Yamana being the Project Operator. Eric Roth, New Dimension’s CEO, commented, “We are very pleased to be reporting that Yamana is continuing to evaluate the Domain JV area. Considering the significant amount of drilling that has been completed at Main Zone, together with the potential for new discovery, we feel strongly that the project has the potential to grow rapidly. I look forward to keeping the market informed on progress at Domain.”
[Read More] 3 Gold Stocks To Watch For March 2020
This latest update adds to the current list of activities Yamana is undertaking. This is to capitalize on its previously announced, long-term vision. The company entered into a definitive purchase agreement to sell a portfolio of royalty interests at the Deep Carbonates Project. The total consideration of the deal was $65 million. The sale was to Guerrero Ventures Inc. but it offers more than just cash flow. The consideration has been structured to realize both immediate value for these non-core assets. This is through a cash component of $20 million. There’s also a significant $45 million share position in a newly created company.
Another one of the junior gold stocks to watch was B2Gold (BTG-Free Report) on Monday. The junior gold stock is roughly 3.94% of the total assets in the VanEck Junior Gold ETF (GDXJ-Free Report). Shares of B2Gold stock exploded last week after pulling back during the last week of February. Since March 2, B2Gold stock jumped from lows of $3.89 to highs of $4.57 last week. While many gold stocks including BTG slipped at the end of the day Friday, this weekend’s gold surge could spark a boost later this week.
In its most recent financial statement, B2Gold showed that it generated revenues of $314 million in the fourth quarter. This reflected a year-over-year growth rate of 36%. In addition, B2Gold’s consolidated gold production was 234,416 ounces in the fourth quarter.
The company stated, “Looking forward to 2020, B2Gold remains well-positioned for continued strong operational and financial performance with consolidated gold production forecast to be in the range of between 955,000 and 1,005,000 ounces.”
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