2020 has been an unprecedented year for the precious metals market. In August, gold prices hit a record high above $ 2,000 an ounce.
But while the precious metals sector is gaining investor attention, the mining sector continues to lag behind. In particular, its value was much lower than what it was during the last bull market in gold and silver.
However, some market analysts believe this will change this year, since investors will not be able to ignore the expected rally in gold, especially amid new mining companies.
At the moment, gold is trading at 3,000 pips.
In that regard, mining expert Joe Mazumdar listed three of the best mining companies:
Trilogy Metals (TMQ.T, TMQ.NYSE), who has a joint venture with South32 (S32.ASX) on the Arctic deposit of polymetallic volcanogenic massive sulfides with a predominance of copper and a deposit of bornite carbonate replacement in Alaska. The company announced its plan and budget in 2021 (US $ 21 million), which include exploration drilling in Ambler to increase resources.
Liberty Gold (LGD.T, LGDTF.OTC), who is promoting the Black Pine gold project, which has the potential to be an important target for an open pit heap leach in mining-friendly Idaho. The company continues to drill and discover new zones of ubiquitous gold oxide mineralization, expanding its footprint (+ 4.6 sq. Km) and expanding its drilling program for 2021 to more than 50,000 meters. Upcoming catalysts include a first resource (Q1 / 21), a preliminary study or PEA (Q2-Q3 / 21), and a preliminary feasibility study (PFS) of the Goldstrike gold project in southwest Utah, which is currently undervalued.
Bluestone Resources (BSR.V), who is managing the feasibility study for the Cerro Blanco high grade underground gold project in Guatemala. The company resumed its drilling program after being quarantined in October 2020 and has achieved significant results. Current measured and estimated resources contain 1.4 million ounces at 10.3 grams per tonne of gold. The current price is well over $ 1,800. At $ 1,500 and $ 1,700 per ounce, the company would trade at a discount of 0.7-0.8x and 0.5-0.6x, respectively.
Precious metal producers will continue to generate free cash flow on these gold and silver prices, which will offset any minor production shortfalls caused by the COVID-19 pandemic. For example, Pan American Silver Corp. (PAAS.T, PAAS.NASDAQ) generated operating cash flow of $ 292 million, up by 54% over the same period last year.
Of course, it is easier for mid-range producers to output more than other producers such as Barrick Gold (ABX.T, GOLD.NYSE) and Newmont Corp. (NEM.NYSE, NGT.T).
But Biden's presidency will change the outlook for these companies operating in the United States, especially since permits will take longer to obtain, and those emitting significant greenhouse gases will be negatively impacted. The government is trying its best to find a way out of the current economic downturn, while at the same time protecting the local industry.
