Source: Adrian Day
November 20, 2023 (Investorideas.com Newswire) Global Analyst Adrian Day notes that recent earnings reports from gold and precious metals companies reflected lower production and higher costs amid macroeconomic uncertainty. However, strong balance sheets position leading royalty companies to acquire assets.
Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) faced declining sales, though higher prices led to higher revenues.
More significantly, uncertainty surrounds its largest asset, the Cobre Panama copper mine, amid an ongoing dispute in Panama. The government previously banned new mining projects and called for a referendum on the Cobre Panama contract.
While an electoral court ruled conditions were not met for a referendum, Congress voted to void the contract.
This jeopardizes Franco-Nevada's stream and First Quantum's ownership.
If nationalized, international arbitration would likely repay Franco's investment cost but not the full value. Ongoing volatility is expected, given Panama's unreliability.
After the sharp price decline, Franco is a Buy
Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) announced leadership changes, including a new CEO and chairman.
While production met guidance, costs were higher.
The company sees assets advancing towards production, maintaining a strong project pipeline.
The appointment of a new CEO received a positive analyst response, given his industry experience. However, some uncertainty remains regarding strategic direction.
Hold for further clarification.
Although analysts described its results as 'horrible' and 'brutal,' Pan American Silver Corp.'s (PAAS:TSX; PAAS:NASDAQ) 3% production shortfall and 10% cost overrun were not severe.
Guidance was met at the low end. Higher costs stemmed from integration challenges, byproduct credits, and fuel prices. Debt repayment and asset sales have strengthened the balance sheet.
Moreover, the La Colorada skarn and potential Escobal restart offer production growth, positioning Pan American favorably long-term.
At a multi-year low, it remains a Strong Buy.
Altius Minerals Corp. (ALS:TSX.V) faced expected headwinds, including lower potash prices and a mine closure. Although earnings missed forecasts, equity holdings buoy the balance sheet.
Share buybacks provide the best capital allocation currently.
With positive asset developments anticipated, Altius offers value near its 52-week low.
It is a Strong Buy.
Midland Exploration Inc.'s (MD:TSX.V) early lithium assays on the Galinée property bode well, given partner Rio Tinto's lithium aspirations. Additional discoveries are encouraging.
With the proxy deadline looming, Nova Royalty Corp. (NOVR:TSX.V) shareholders should vote favorably on the Metalla acquisition.
Specific stocks retaining Buy ratings including Nestle SA (NESN:VX; NSRGY:OTC), Hutchison Port Holdings Trust (HPHT:Singapore), Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX), Barrick Gold Corp. (ABX:TSX; GOLD:NYSE), Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE), Lara Exploration Ltd. (LRA:TSX.V), and Orogen Royalties Inc. (OGN:TSX.V).
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