Summary

  • In 2018, the metal sectors’ overall contribution to Canada’s total nominal GDP was 5% or C$ 97 billion.
  • Quantum First Minerals’ stock has rebounded by almost 161 per cent since the pandemic-led crash on March 24.
  • New Gold Inc. scrips posted a 147.8 per cent growth year-to-date (YTD).

 

Canada is one of the leading global producers of minerals like cobalt, graphite, and nickel. The metals and mining industry is also producing commodities such as natural gas and oil. Historically, the country has profited from low-cost mineral and metal products, whose mining created employment opportunities and substantial capital development. However, this industry was not spared by the pandemic-led recession. Mining operations were impacted by government-directed lockdowns, social distancing, and the reduced demand for various commodities. Stocks of companies such as First Quantum Minerals Ltd. (TSX: FM) and New Gold Inc (TSX: NGD) were also impacted by the pandemic.

The mining industry has made significant contributions to Canadian economy. The industry directly employs 409,000 people across mineral extraction, smelting, production, and manufacturing divisions, and indirectly employs an additional 217,000 people. It is also the largest private-sector employer of indigenous people, employing 16,500 natives. In 2018, the metals sector contributed C$ 97 billion or 5 per cent to Canada’s total nominal GDP, shows federal data.

 

First Quantum Minerals Ltd. (TSX: FM)

Current Stock Price: C$ 13.15

 

Mining and exploration company First Quantum Minerals Ltd produces copper, nickel, gold, zinc, and sulfuric acid. It has mining operations in Zambia, Finland, Turkey, Spain, and Mauritania.

 

First Quantum Stock Performance

The company’s 10-day average trading volume is 2.1 million. The stock is among the most actively traded stocks across the TSX and TSXV in the last 10 days, as per data on TMX Money.

First Quantum stock has rebounded almost 161 per cent since the pandemic-led crash on March 24 and is up 7.34 per cent in the last three months.

The company scrips are trading flat year-to-date (YTD).

First Quantum’s current market capitalization stands at C$ 9 billion.

Quantum First's Six-month Stock Performance Chart / Source: Refinitiv, Thomson Reuters

The company has a dividend yield of 0.076 per cent. First Quantum pays the semi-annual dividend of C$ 0.005 per share.

The stock’s price-to-book ratio is 0.744 and the price-to-cashflow ratio is 5.40. Its current debt-to-earnings ratio is 0.93, added the TMX data.

 

First Quantum Financial Highlights:

First Quantum Minerals reported US$ 1-billion sales revenue in the second quarter of 2020 earnings report, an increase of 8 per cent compared to US$ 939 million in Q2, 2019. The company’s comparative EBITDA was US$ 352 million in Q2, a 6.38 per cent drop compared to US$ 376 million in Q2 2019.

The company posted gross profit of US$ 141 million in the latest quarter, a 28 per cent decline compared to US$ 196 million in Q2, 2019. The operating cash flow decreased by nearly 12 per cent to US$ 155 million in the second quarter.

The First Quantum Minerals Ltd. will release its third-quarter earnings on October 29, 2020.

 

New Gold Inc. (TSX: NGD)

Current Stock Price: C$ 2.85

 

Toronto-based New Gold Inc is a gold mining company with operations spread across the globe. The company has invested in New Afton Mine in Canada, Mesquite Mine in North America, and Cerro San Pedro Mine in Mexico. It also has a 100 per cent ownership of the Rainy River and Blackwater ventures in Canada, along with a minority stake in  El Morro gold stream project in Chile. The New Afton Mine in British Columbia is the main section, generating almost 50 per cent of group revenue.

In its third quarter 2020 operational results, the company reported total production of 115,536 gold equivalent (gold eq.) ounces (78,959 ounces of gold), 171,825 ounces of silver and 18.2 million pounds of copper, for Q3 FY20.

In its third quarter 2020 operational results, the company reported total production of 115,536 gold equivalent ounces (78,959 ounces of gold, 171,825 ounces of silver and 18.2 million pounds of copper).

 

New Gold Stock Performance

The gold mining company’s 10-day average share trade volume is 3.1 million. The stock is among the most actively traded stocks across the TSX and TSXV in the last 10 days, as per TMX data.

New Gold also ranks on TMX’s top basic material stocklist that have TSX and TSXV stocks with the largest price gains in the last 30 days. The gold company has also been placed on TMX’s top metals stocks that have the largest price gains on the TSXV and TSX in the last 30 days.

The company stock is up 32.5 per cent in the last three months. It has surged almost 290.4 per cent since the pandemic-led crash on March 24. The year-to-date growth stands at 147.8 per cent.

New Gold’s current market capitalization is C$ 1.9 billion.

The company price-to-book ratio is 1.748 and the price-to-cashflow ratio is 5.60. Its current debt-to-earnings ratio is 1.32 as per TMX data.

 

New Gold Financial Highlights

The company reported total revenue of US$ 128.5 million for the second quarter of 2020, down 16.78 per cent year-over-year. New Gold posted a net loss of US$ 46 million in Q2 2020 (US$ 0.07 per share). The company did not report EBITDA for the second quarter of 2020 in its financial statement.

 

 

2020 is the year for gold stocks. A key contributor to Canada’s economy, the yellow metal is making its presence felt as safe haven amid the pandemic. Gold is hovering around an all-time high price and investors are lapping up the bullion.

And it seems that the gold rally is here to stay. The TSX gold index has capped its best second quarter since 2009.

Canada is the world’s fifth-largest gold producer with the highest number of active mining companies.

But selection of growth and high-value stocks can be a challenging. From lustrous leaders to junior mining firms – every company in the gold business is trying to be the winner.

Don’t worry - Kalkine has you covered.  

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