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Highlights
- A merger deal between Agnico Eagle Mines and Kirkland Lake Gold was announced.
- The president of one of the below companies stated that the company has set a target to reduce emissions by 30 per cent by 2030 (as per its 2018 baseline).
- One of these companies completed geological modeling of a gold domain that is part of its flagship project.
In the wake of the merger and the anticipated low-premium deal between Agnico Eagle and Kirkland Lake Gold, the stock price of both companies fell. The deal is expected to create a much larger gold-producing entity with high standards of quality.
More often, investing in gold is also believed by many analysts to be a safe haven, thereby giving better diversification of portfolios and risk-return objectives to investors.
On that front, let us look at some of the gold stocks traded on the TSX and TSXV.
- Agnico Eagle Mines Limited (TSX: AEM)
The gold mining company operates in Canada, Finland, and Mexico. Agnico Eagle Mines has been producing precious metals since 1957. The company paid a quarterly dividend of US$ 0.35 per share on September 15. The dividend yield was 2.78 per cent, while the three-year average dividend growth rate was 35.82 per cent on September 29.
The senior leadership of Agnico Eagle Mines announced a merger deal with Kirkland Lake Gold, a gold mining company. In the second quarter of fiscal 2021, the company produced 526,006 ounces of gold and posted a net income of US$ 189.6 million or US$ 0.78 on a per share basis.
The gold scrip posted a return on equity (ROE) of 13.58 per cent and a return on assets (ROA) of 7.94 per cent. It also held a market cap of C$ 15.36 billion on September 29.
The stock price of Agnico Eagle Mines dipped by nearly 40 per cent over the past year while it closed at C$ 63.03 on September 28.
- Kirkland Lake Gold Ltd (TSX: KL)
The Canadian gold mining company has a diverse portfolio consisting of mining, exploration, and developmental projects. Kirkland Lake is expected to roll out a quarterly dividend of US$ 0.188 per share on October 13. Meanwhile, the dividends grew at a three-year average of 85.15 per cent and it posted a dividend yield of 1.85 per cent on September 29.
A merger of Agnico Eagle Mines with Kirkland Lake Gold was announced by the management of the gold company. It is believed to turn the merged entity into the highest quality gold producer. The deal is expected to be closed.
Over the past year, the stock price of Kirkland Lake Gold dropped by 21 per cent, but it increased by 27 per cent in the last six months. On September 28, it closed at C$ 51.38 apiece.
The revenue posted by Kirkland Lake was US$ 662.7 million in Q2 FY21, an increase of 14 per cent Year-over-Year (YoY). It incurred an exploration expenditure of US$ 45.7 million and posted net earnings of US$ 244.2 million in Q2 FY21.
On the valuation front, the earnings per share (EPS) of Kirkland Lake Gold was 3.82. It also posted an ROE of 16.07 per cent and ROA of 11.86 per cent (September 29).
Also Read: 5 Canadian gold stocks to buy
- Barrick Gold Corporation (TSX: ABX)
The C$ 40.77 billion market cap (September 29) gold producing company also owns copper and gold reserves. Its gold mines are located in Australia, Africa, and North and South America.
Barrick Gold paid its shareholders a quarterly dividend of US$ 0.09 on September 15. The dividend grew at a five-year average of 33.64 per cent and at a three-year average of 37.2 per cent.
The metal and mining company held a price-to-earning (P/E) ratio of 12.9, ROE of 10.72 per cent, and ROA of 5.34 per cent on September 29.
Mark Bristow, the president and chief executive of Barrick Gold, stated that the company has set a target to reduce 30 per cent emissions levels by 2030 and achieve zero-emission levels by 2050 (corresponding to 2018 baseline).
The stock price of Barrick Gold reached its 52-week high of C$ 38.27 on November 6, 2020, and closed at C$ 22.93 on September 29. The one-year stock return was down by 37 per cent.
Also Read: 5 best gold stocks to buy while they are cheap
- Sabina Gold & Silver Corp. (TSX: SBB)
Sabina Gold & Silver is an emerging metal company with high-quality and advanced gold assets in Canada. The company incurred a net loss of C$ 1.6 million in Q2 FY2021, and its cash and cash equivalents were C$ 48.2 million in the same quarter.
The metal and mining company held a market cap of C$ 511.66 million and a debt-to-equity (D/E) ratio of 0.01. The outstanding shares of the company were 348.07 million on September 29.
On a quarter-to-date (QTD) basis, the stock price of Sabina Gold & Silver dipped by close to 16 per cent. However, the stock price increased by one percent on a week-to-date (WTD) basis. On September 28, it closed at C$ 1.47.
- Great Bear Resources Ltd (TSX: GBR)
The gold exploration company explores minerals in the Red Lake District of Ontario based in Canada. Great Bear Resources completed geological modeling of one of its gold domains of high-grade gold within its flagship Dixie Project.
The gold exploration scrip held a price-to-book (P/B) ratio of 6.32 and a market cap of C$ 791.81 million (at the time of writing).
On September 28, stocks of Great Bear traded seven per cent above its 52-week low of C$ 12.8 and were priced at C$ 13.69 on market close. The stocks dipped by close to 14 per cent over the past year.
Bottom line:
Before investing in gold stocks, investors must be aware of changes in the prices of gold and commodities that may impact stock prices.
