The new gold rush is on. Gold prices are accelerating to $2,000 thanks to a slide in government bond yields, a falling U.S. dollar, and big interest from Warren Buffett’s Berkshire Hathaway. In fact, the firm just revealed it just took a new stake in the world’s second biggest gold miner, Barrick Gold. The buy comes as a bit of a shock with Buffett historically a critic of gold. So, his move comes as a bullish surprise. Gold last traded at $1,983.63, and could soon hit $2,000.
“In the past, Buffett, the billionaire chairman of Berkshire, cautioned against investing in the metal because it’s not productive like a farm or a company. Now, gold miners are benefiting from surging bullion prices that are boosting profit margins as costs of production have steadied, making them increasingly attractive investments. Large miners including Barrick and Newmont Corp. have been hoping to woo back generalists who fled the sector years ago,” says Bloomberg. That’s all creating big opportunity for gold companies including Eclipse Gold Mining Corporation (TSXV:EGLD)(OTC:EGLPF), Sandstorm Gold Ltd. (NYSE:SAND)(TSX:SSL), Barrick Gold Corp. (NYSE:GOLD)(TSX:ABX), Franco Nevada Corporation (NYSE:FNV), and Newmont Corporation (NYSE:NEM).
Eclipse Gold Mining Corporation (TSXV:EGLD)(OTC:EGLPF) BREAKING NEWS: Eclipse Gold Mining Corporation reported it will commence the next phase of drilling at its Hercules Gold Project in Nevada’s Walker Lane trend. The Company has secured a drill rig and begun mobilization for its Phase Two drill program. Drilling will commence next week and is planned to include up to 18 reverse circulation holes, totalling approximately 6,750 metres.
Drilling will test potential extensions of known gold mineralization to the east of Cliffs, the newly defined Hercules Structural Zone that runs north-south through the Northeast and Hercules targets, and geophysical targets generated by the Company’s recent IP geophysical program between the Cliffs and Hercules targets.
Dr. Warwick Board, Vice President of Exploration for the Company commented, “With our new geophysical data refining the geological model of the Hercules Gold system we are excited to begin this phase of drilling, testing high priority targets on the property. The new data indicates that the Hercules system may be a large-scale epithermal gold system where only the outer edges have been tested by drilling to date.”
Eclipse is the first to aggregate data and look at Hercules through a district-scale lens using a systematic, science-focused approach. The Company has created an 85-square-kilometres, district-scale land package, through claim-staking and ownership consolidation, that is known to host a low-sulphidation epithermal gold-silver system of undefined size.
Recent drilling has highlighted the strength and continuity of the mineralized system at Hercules, intersecting broad intervals of near-surface oxide gold-silver mineralization in all target areas tested to date, some greater than 50 metres. Results from a recent ground IP survey identified a new “Hercules Structural Zone,” a potential feeder structure, that extends more than 2,000 metres along strike, and remains open for expansion. Of note, Phase One drilling has shown an apparent increase in thickness and grade of mineralization of the low sulphidation epithermal gold-silver system to the south, indicating the property-wide system could be larger than previously imagined.
This Phase II program may be further refined based on the results of the Helicopter based EM survey that is currently being completed, as further described in the Company’s news release dated August 4th, 2020.
Other related developments from around the markets include:
Sandstorm Gold Ltd. (NYSE:SAND)(TSX:SSL) released its results for the second quarter ended June 30, 2020. Due to the unknown long-term effects of the current global health pandemic, Sandstorm withdrew the Company’s 2020 production guidance. Based on the Company’s existing royalties, attributable gold equivalent ounces sold are forecasted to be approximately 125,000 ounces in 2024. Sandstorm’s revenue during the second quarter of 2020 was $18.7 million compared with $21.5 million for the comparable period in 2019. The decrease is largely due to a 33% decrease in the attributable gold equivalent ounces sold, partially offset by a 31% increase in the average realized selling price of gold. Net income was higher when compared to the same period in 2019 primarily due to a $3.7 million increase in the gains recognized on the revaluation of the Company’s investments; whereby a gain of $5.1 million was recognized during the second quarter of 2020 largely driven by an increase in fair value of the Americas Gold and Silver Corp. convertible debenture and Equinox Gold Corp. warrants. Other factors impacting the increase in net income include a $2.1 million decrease in the cost of sales, partly due to a decrease in the attributable gold equivalent ounces sold.
Barrick Gold Corp. (NYSE:GOLD)(TSX:ABX) announced that its Board of Directors has declared a dividend for the second quarter of 2020 of US $0.08 per share, a 14% increase on the previous quarter’s dividend, payable on September 15, 2020, to shareholders of record at the close of business on August 31, 2020. Senior executive vice-president and chief financial officer Graham Shuttleworth said that Barrick’s quarterly dividend has more than doubled since the announcement of the Barrick-Randgold merger in September 2018, reflecting Barrick’s continued strong financial performance. “The Board believes that the dividend increase is sustainable and is reflective of the ongoing robust performance of our operations and continued improvement in the strength of our balance sheet, with total liquidity of $6.7 billion, including a cash balance of $3.7 billion as of the end of the second quarter, and no material debt repayments due before 2033,” said Shuttleworth.
Franco Nevada Corporation (NYSE:FNV) diversified portfolio performed well despite the impact of COVID-19 during the quarter. “We recognize the efforts of our operators and their related communities during this difficult period”, stated Paul Brink, CEO. “Of our original 56 cash generating mining assets, 15 experienced some form of temporary curtailment in Q2. All except Golden Highway have since resumed operations. The return to normal operations and higher gold prices makes us optimistic about the second half. In addition, we see the potential for longer-term organic growth from our over 240 exploration and development royalties due to increased capital available to the gold sector. Our energy assets should benefit now that oil & gas prices have stabilized since the lows experienced in Q2. Franco-Nevada is debt free, has a growing cash balance and expects good growth in our gold equivalent ounces over the next few years.”
Newmont Corporation (NYSE:NEM) announced second quarter 2020 results. “In the second quarter we delivered solid financial performance with $984 million in adjusted EBITDA and $388 million in free cash flow, both substantial increases over the prior year quarter. Our focus remains on ensuring the health, safety and wellbeing of our workforce and neighboring communities as we manage through the Covid pandemic. I am very proud of our workforce for the agility and resolve that they have demonstrated during these challenging times,” said Tom Palmer, President and Chief Executive Officer. “We safely and efficiently executed restart plans at our mines previously in care and maintenance and Newmont’s world-class portfolio is well positioned to deliver an even stronger second half of 2020. The ongoing favorable gold price environment amplifies our free cash flow generation yet our discipline around capital allocation will not change as we continue to invest in profitable projects and provide shareholders industry-leading returns while maintaining a strong balance sheet.”
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